• EU leaders say further budgetary stimulus not warranted. Focus should shift toward budget consolidation as economies recover – final summit draft
  • EU leaders back commission plan for swift disbursement of next instalment of Latvia aid
  • BOE’s King: We’re seeing some signs that pace of decline in economy is levelling off, but too early to draw strong conclusions from recent data – Newspaper interview
  • BOE’s King: Not very sensible to expect activity to pick up as quickly as fall in recession
  • German May PPI unchanged m/m, -3.6% y/y, exactly as expected. Biggest annual decline in 22 years
  • IMF’s Lipsky: Says IMF to modestly revise up 2010 growth forecast
  • Dutch June adj consumer confidence -24 after -23 in May
  • Italian Q-1 unemployment (s.a) 7.3% vs Q-4 2008 7.0%, highest since Q-1 2006. Exactly as expected
  • Iran’s supreme leader Khamenei says Iranian nation needs calm. No rift among senior officials, only differences of opinions. Islamic Republic law would never allow vote rigging. Street protests should end
  • ECB’s Gonzalez-Paramo: Economic recovery less certain unless reforms delivered. ECB has not decided 1% lowest rate. Too early to plan exit strategy

Risk sentiment is in pretty good nick, supporting likes of sterling, aussie, canadian dollar and euro. S&P futures up 5 points.

EUR/USD came under some pressure early, taking out buy orders in 1.3900/10 area, which included Russia buy interest. Sources reported more buy orders lined up at 1.3880/85 and they were enough to provide support and a launch pad for a rally back to 1.3935 presently, a touch firmer from where we started the day. Sources note sell orders lined up at 1.4000/10. Pretty boring stuff.

Cable made the most of the benevolent risk environment. Having started out around 1.635o cable saw accelerated gains when sell orders at 1.6400 were filled and buy stops just above triggered, sending the pairing to a session high 1.6450. We’re presently off a little at 1.6435.

USD/JPY is a little firmer, up at 96.80 from an early 96.60, with the JPY seeing some across the board weakness against the backdrop of improved risk sentiment.