• Australia’s Treasurer Wayne Swan says removes withholding tax on government bonds to make them more attractive
  • Shanghai share index ends up 1.7%
  • French August flash manufacturing PMI 50.2, up from 48.1 in July, highest read in 15 months. Services 48.9, up from 45.5. Composite 50.9, up from 47.3, highest read in 15 months
  • German August flash manufacturing PMI 49.0 better than median forecast 47.0 and highest read in 12 months, services 54.1 better than median forecast 48.6 and highest read in16 months . Composite 54.2 and highest read in 15 months
  • Euro zone August flash manufacturing PMI 47.9 better than median forecast 47.5 and highest read for 14 months, services 49.5 better than median forecast 46.5 and highest read for15 months, composite 50.0, better than median forecast 48.0 and highest read in 15 months

Risk on. Sentiment boosted by release of better than expected European PMI data.

EUR/USD having started off around 1.4215 has been as high as 1.4335 so far. There have been muttering of Asian central bank sales above 1.4300, but personally haven’t been able to confirm such. China probably won’t leave it too much longer before it makes a concerted stand to slow the rally given it’s well-touted dnt option interest. We’re presently at 1.4325.

The market will have also noted comments made by Joseph Stiglitz. The Nobel-prize winning economist feels the dollar’s role as a good store of value is “questionable” and feels the currency has high degree of risk.

Cable has had a good morning. Having stood around 1.6440 it’s been as high as 1.6577 so far, bolstered by better risk sentiment.

USD/JPY touch firmer, JPY weak across the board given improved risk appetite. USD/JPY at 93.85 from early 93.60. Sources note layered sell orders from 94.00 up through 94.50.

Aussie has had a very good morning, obviously bolstered by better risk appetite. But the move by the Australian government to remove interest withholding tax (IWT) on government bonds, to make them more attractive, will also have given aussie a good fillip.

AUD/USD having stood at .8235 in early Europe is presently up at .8330.