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European Morning Wrap: Market Embraces Risk

|Includes: FXB, CurrencyShares Euro Trust ETF (FXE), FXY
  • Bank of Spain governor: Europe coordination against crisis has moved in "fits and starts", sometimes failed to be rigorous, ambitious enough
  • Spanish Industry Minister: Spain rules out seeking bailout. More expansive ECB policy 'desirable'
  • Spanish auction results
  • Greek auction results
  • Belgian auction results
  • EFSF auction results
  • Bank of Italy: Italy budget measures to bring "ample improvement" to public accounts over next two years despite negative 2012 growth
  • ZEW April German economic sentiment index 23.4, stronger than median forecast of 20.0
  • ZEW: Economic expectations have stabilised
  • IMF's Lagarde; Budget consolidation measures in Italy announced so far are sufficient, must be implemented. Seen progress in Spain on reforms, budget consolidation, must continue to do so. Hopes fund's resources will be boosted this week by more than $400 bln
  • Swedish FinMin: Ready to commit initial $10 bln to strengthen IMF. Maximum would be 100 bln SEK
  • Sarkozy: Lower euro "is good news"
  • Fitch affirms Austria at AAA; outlook stable
  • UK March CPI +0.3% m/m, +3.5% y/y, as expected
  • Japan s.a. March consumer confidence index 40.3, up from 39.5 in February

Market feeling a bit better about things today. Risk on; European stocks, oil, gold, US treasury yields all up on the day. DAX up around a full percent, oil up about a buck, gold up 8 bucks from level that greeted me first thing and US 10 year benchmark treasury yielding 2.0078% from early 1.9720%.

EUR/USD (NYSEARCA:FXE) up at 1.3135 from early 1.3115, but some way from session high of 1.3172. Decent eurozone bond auctions and stronger than expected German ZEW data have helped provide support. The lack of strong follow through will be of concern to the euro bulls.

USD/JPY (NYSEARCA:FXY) up at 80.65 from early 80.40, EUR/JPY (the risk barometer) up at 105.95 from around 105.45. Firmer US treasury yields lending USD/JPY some much needed support.

Cable (NYSEARCA:FXB) up at 1.5950 from early 1.5880 despite large sovereign selling in 1.5915/25 region.