Stellar Sterling -Better equity markets.......>

FOREX: Stellar Sterling

-Better equity markets across Asia and Europe have flattered currency markets

slightly this morning, with modestly better risk appetite helping soothe high

beta FX. As a result, GBP and AUD extend their outperformance this morning and

are the only two in G10 up against the USD since Monday's open.

-Havens are on the back foot, with JPY and CHF lower although the SNB will

likely be dissatisfied with EUR/CHF still in very close proximity to yesterday's

cycle lows at 1.0835. Similarly in USD/JPY, the pair sits higher early Friday,

but gains still look fragile given the acute headline risk markets still face.

Any ratchet higher in trade tensions, for example, could easily see the pair

revisit August (and multi-month) lows at Y105.05.

-Newsflow has been relatively light, allowing markets to continue to sell the

single currency following dovish comments from ECB's Rehn in the WSJ yesterday.

EUR/USD bears eye 1.1027 and the 1.10 handle as the near-term targets.

-Calendar highlights today include US housing starts/building permits and prelim

Uni. of Michigan data.