• UK house prices +1.2% m/m, -11.3% in May vs -0.3%, -15.0% in April – Nationwide
  • German April prelim retail sales +0.5% m/m, better than median forecast of flat
  • Gfk/NOP UK consumer confidence index unchanged at -27 in May
  • Eurogroup’s Juncker: Regrets volatility in fx rates still too high. Lots of irrationality in markets and it isn’t helpful for organised economic recovery
  • German FinMin Steinbrueck: German finances must lend credibility to euro
  • Germany’s Merkel: Will do utmost to avoid Opel insolvency
  • UK car scrappage scheme boosts sales 35k in 2 weeks
  • Euro zone May inflation estimated at flat y/y, below median forecsast of +0.2% – Eurostat
  • Swiss KOF leading indicator -1.86 for May, unchanged from April.Median forecast -1.88
  • EU’S Almunia: Exiting recession. Can look forward with greater optimism, hope on economy
  • ECB’s Trichet: Too early to say when emerging markets will bottom out, but some data is “somewhat encouraging.”
  • ECB’s Trichet: Global economic environment still “very difficult and unpredictable”, no room for complacency

USD started off on the defensive and has seen accelerated across the board losses during the European morning session. Concerns surrounding the US government’s burgeoning debt and it’s ability to service it have been heightened by the news that South Korea’s National Pension Fund is to reduce its exposure to US bonds.

Risk appetite is also in good shape, helping underpin likes of sterling, euro, aussie and canadian dollars.

EUR/USD moved over 1.4000 early and reached 1.4013 where it ran into decent Russian sell interest. The pairing slipped back under 1.4000 but didn’t stay there too long as the Bank of Korea entered the market buying aggressively. The release of better than expected German retail sales data helped underpin the pairing.

In recent days there had been ongoing talk of China selling interest lying in wait above 1.4000 and when it didn’t materialise this was another added fillip. Buy stops just above 1.4050 were eventually triggered helping send the pairing to a 1.4117 session high at writing.

Cable was quickly off the mark and was quickly through 1.6000. The release of strong Nationwide UK house price data added to sterling’s allure. The move accelerated further when buy stops just above 1.6100 were triggered, helping the rally extend to a session high 1.6172 at writing.

USD/JPY is lower, down at 95.75 from an early 96.55, while AUD/USD is up at .7980 from an early .7895. These moves have been helped by talk of USD/JPY sell interest, aussie and kiwi demand lined up for the 15:00 GMT fix later today.