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European Morning Wrap Up; It was a game of two halves Brian

Fri, Nov 27 2009, 12:25 GMT
http://www.forexlive.com

German October import prices +0.5% m/m, -8.1% y/y, vs median forecasts of +0.3%, -7.9% Japan govt spokesman Hirano: Will take economic measures while watching stock, currency measures China says to keep implementing stimulus to counter financial crisis in 2010. Aims to boost sustainable domestic demand, especially consumption. Will actively boost imports, seek to stabilise exports - State TV BOE's Bean:  UK growth in Q4 would not surprise me, further strengthening after that BOE's Posen: Believe UK economy has bottomed out Japan PM Hatoyama: Stable forex moves desireable, no comment on how to stem yen rise. Should consider steps on how to help exporters hurt by yen rise Magnitude 5.5 earthquake hits Venezuela - USGS Chinese Trade Min: Stability of the yuan is favourable to Chniese, global economic recovery. The important thing is for China to maintain stability of yuan Euro zone November economic sentiment hits 88.8 vs 86.1 in October, slightly better than median forecast of 88.0 ECB's Orphanides says Dubai situation confirms economic rebound could be bumpy French trade Minister: French companies more concerned about level of US dollar than Chinese yuan Swiss November KOF leading  indicator 1.62, lower than median forecast of 1.80 Well that was a jolly exciting session, I must say.  Pretty much a game of two halves.  Heightened risk aversion at the outset, with European stocks slumping hard,  giving way to a slightly more relaxed  feel as stocks recovered their poise. EUR/USD started around 1.4925 and was soon on the defensive, the sell-off accelerating when stops were triggered just below 1.4900 and again just below 1.4850. We got down to a session low 0f 1.4830 where sovereigns (countries/continents not forthcoming) were reported as strong buyers. Market participants will have remembered (well forexlive readers will) that there is a 1.4800-1.5200 dnt in place, so reports of sovereign purchases just ahead of the downside parameter weren't too much of a shock. European stocks then began to rally and EUR/USD headed higher too. We're presently back up at 1.4905. Talk of decent sell orders now up at 1.4940/50. stops above 1.4960. Cable got hit particularly hard early, underminned by the general risk aversion, the fact UK banks have lumpy exposure to Dubai and by reports Chancellor Darling will be lowering his 2009 GDP forecast during his pre budget sppech next month. We went from around 1.6410 at the start to a session low 1.6272 before bouncing strongly. The bounce in European stocks, bullish comments made by BOE officials Bean and Posen in two seperate newspaper interviews (see above), and strong buying from one particular Asian central bank and middle eastern names below 1.6300, all combined to fuel the comeback. We're presently back up at 1.6375. USD/JPY after a very hectic overnight session in Asia has been eerily quiet. Sits presently at 86.60 presently, marginally firmer from an early 86.45.  So far important resistance  up at 87.11 remains intact. Talk of stops just above there. Lots of verbal intervention again today, but no one sems to be taking it overly seriously at the moment. AUD/USD meanwhile is marginally easier on the day, down at .9000 from an early .9025.