(Action Economics) - 06:27 EST European Fixed Income Update: Bund futures are little changed and outperforming Gilts, which are down on the day, despite much stronger than expected German manufacturing orders data. Stock markets are higher, with the Italian MIB index the notable exception and spreads continue to widen ahead of the ECB meeting as strong data weighs on any lingering hopes of a rate cut, with intra-eurozone safe haven flows supporting Bunds. We don't expect any further measures from the ECB for now, which will leave the focus on the updated set of forecasts. The BoE is also expected to keep monetary policy unchanged. The European calendar also had final eurozone Q2 GDP, confirmed at -0.1% q/q. The U.K. October goods deficit came in worse than expected and Swiss November CPI unexpectedly fell to -0.4% y/y. In the cash market the 10-year Bund yield is down 0.9 bp at 1.34% and the Gilt yield up 0.3 bp at 1.78%. Meanwhile the Italian 10-year is up 13 bp at 4.57% and the Spanish up 11.2 bp at 5.47%. By comparison the DAX was up 1.03% after the strong orders numbers and the FTSE 100 up 0.23% as of 11:07GMT. For a full update see our European Fixed Income Page.
06:25 EST European Midday FX Update: The dollar traded on an easier footing in Europe as stocks posted modest gains. Central bank reserve diversification was evident and it supported EUR, GBP and AUD on dips. The jump in German manufacturing orders by 3.9% m/m added to the supportive tone ahead of the N.Y. open, while eurozone Q3 GDP was confirmed at -0.1% q/q. The U.K. trade deficit came in worse than expected at GBP 9.5 bln after exports fell 1.6% and imports rose 2.3%. Specs added some swissy shorts ahead of tomorrow's SNB policy review after Swiss CPI unexpectedly fell to -0.4% y/y. NZD-USD remained on the front foot around 0.8300 after RBNZ left rates on hold at 2.5% and Governor Wheeler was less dovish than he had been in previous months.See FX Trader page.© The Canadian Press, 2005