By: Pete Jackson

Fitch cuts Japan’s long term rating to A+ with a negative outlook IMF’s UK review… BOE should cut rates and introduce further QE UK April CPI +0.6% m/m, +3.0% y/y (expected 0.6% and 3.1%), lowest y/y since Feb 2010 OECD says fed shouldn’t abandon QE Secret Eur 100 bln aid props up Greek Banks Spanish bank losses could be as high as E260 bln Facebooks 11% fall.. Fingers point to Morgan Stanley JP Morgan losses may exceed $7 bln Germany's Merkel:  Need to create a EU wide framework to rescue banks prone to systemic risk Spanish Letra auction EFSF Auction EUR/USD  was sitting around 1.2788  when i sat down this morning with the tone set for a mild bit of risk-on after  Asian bourses picked up in a continuation from NY. Early buyers  eventually took out offers ahead of 1.2800 with the BIS seen on the bid, but the move stalled into good offers  (reportedly ACB) ahead of 1.2810, Poor Spanish auctions  and weaker EU GDP forecasts from the OECD led  to some risk aversion and a slip back  to lows of 1.2742.  Offers remain up around 1.2810 with buy stops up through 1.2830 and 1.2855. Bids now lie towards 1.2725 with some sell stops just below. GBP/USD, picked up from early lows around 1.5810 on the back of some Middle Eastern buying but failed to penetrate through sizeable offers ahead of 1.5850 (Talk of Reserve Bk of India selling in the 1.5840's). April CPI disappointed with a lowest y/y reading for almost 2 years and the pair slipped back to  1.5764 with the EUR/USD.  EUR/GBP nosed up  on some UK clearer buying through heavy offers around 0.8100 but failed to hold the gains , logging a high of 0.8102 before easing back to the low 0.8080's USD/JPY  picked up from  79.35  on some eur-yen buying as EUR/USD broke up above 1.2800 and was further boosted by the Fitch downgrade, accelerating to 79.85 before settling back around 79.70. The EUR/JPY slipped back from 101.95 to 101.55. AUD/USD failed to break up through offers around 0.9935 and was hit by the Fitch Japanese downgrade tripping sell stops through 0.9900 , filling real money bids  in the 0.9880's to lows of 0.9866. Gold and WTI crude both yielded to the pressure following the OECD ,  Gold dropping around $17 to  1773 and Crude off  around $1 to  $92.20 Most European bourses are  fractionally up on the day around 0.5%, with Italian MIB up  around 1.5%