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European morning wrap: Risk on. Hope springs a turtle

|Includes: FXB, Invesco CurrencyShares Euro Trust ETF (FXE), FXF, UUP
  • German Gfk November consumer sentiment indicator rises to 5.3 from previous 5.2, better than median forecast of 5.1
  • UBS consumption indicator Switzerland 0.84 in September, up from previous 0.80 (upwardly revised from initial 0.79)
  • French October consumer confidence 82, up from unrevised previous 80, better than median forecast of 79
  • German Vice Chancellor Roesler: Both proposed EFSF leverage models would fulfil his party’s core criteria. Confident Chancellor Merkel’s coalition will get its own majority in Wednesday’s Bundestag vote on EFSF leverage
  • Germany’s FDP GenSec: Proposals on leveraging EFSF are acceptable to FDP
  • ECB’s Bini Smaghi: Many still dream of “orderly” restructuring, reaction to 21 July deal has proved that reality different
  • Austrian FinMin: Do not want to invest fresh money into Greek bailout. Believes can prevent uncontrolled effects like in Lehman case in Greek crisis
  • India central bank (RBI) raises repo rate 25 bps to 8.5%
  • Rumour: China to cut reserve requirement ratio (NYSE:RRR)
  • Swiss National Bank governor:  Franc remains at a high level vs euro, to gradually weaken.  Ready to take further action on franc if warranted by outlook, deflationary pressure
  • BOE Governor King: Came very close to adding QE in September
  • King: Need to improve bank incentives to lend to SMEs
  • King: There’s a “very large squeeze” on UK household incomes.  Yet to hear a credible plan for BOE to boost small business lending incentives (all comments made in testimony before Treasury Select Committee)

Risk on.  European stocks, oil, gold, US treasury yields all up, yada, yada, yada. You know the gig.

EUR/USD up at 1.3950 from early 1.3900 having been as high as 1.3959.  Middle East have been persistent buyers below 1.3900.  Had reports of M/E purchases as high as 1.3930. 

Real money sell interest up at 1.3950/60 so far capping the topside. Talk of buy stops through both 1.3960 and 1.3970.  Barrier option interest remains up at the psychological 1.4000.

Cable up marginally at 1.6005 from early 1.5985.  Russia was an early seller, helping pressure the pairing as low as 1.5962 before decent rebound.  Talk now of sell orders  layered from 1.6020 through 1.6060.  We’ve been as high as 1.6022.

USD/JPY all but unchanged at 76.15 in another very quiet trade.

AUD/USD maginally firmer at 1.0485 from early 1.0465, underpinned by risk on backdrop.