Monday, 13 June 2011

Ldn FX: Euro-dollar Extends Post ECB Falls | iMarketNews.com

LONDON, June 10 (MNI) - Euro-dollar extended falls hit following the European Central Bank rate decision press conference, with reported stops below $1.4450 becoming an early downside target.

Rate traded to $1.4445 before recovering, but remained below $1.4500. Move lower, following Thursday's ECB 'signal' that rates likely to be hiked at the July meeting, seen as a 'buy the rumour, sell the fact' scenario as attention turns back toward eurozone peripheral concerns, especially Greece, with traders looking to adjust positions ahead of the weekend, many European centres closed Monday for Whitsun.

EURO SUMMARY: Opened in early Europe around $1.4487

of $1.44777, with recovery efforts capped at $1.4540 in this session. Rate initially eased to $1.4405 in early Asia before short covering, reported Asian sovereign buys and Gotobi demand at the Tokyo fix for euro-yen provided the upside drive to retest the NY recovery cap. Korea 25bps hike gave the added boost to take rate above before it topped out at $1.4552. Euro-yen was sold post fix and weighed back on euro-dollar, the rate easing below $1.4500 to $1.4484 ahead of the European open before recovering to hold close to $1.4500 into the European open. Stops sub $1.4470 were targeted and triggered to take rate to $1.4465, bouncing to $1.4495 before coming under heavier pressure as market targeted the larger stops sub $1.4450. Rate touched a low of $1.4445 before recovering, though move was held below $1.4500, before settling around $1.4480/85.

EUROZONE: Reported comment sfrom eurozone officials Friday, * GERMAN FINMIN: Sees first signs of economic recovery in Greece - Participation of private sector in additional Greek debt relief "unavoidable" - Bond swap that extends maturities by 7 years would give Greece time, fair solution - Germany has responsibility to lead in Europe * ECB TRICHET: The firm anchoring of inflation expectations all during the crisis has made the task of the European Central Bank much easier, ECB President Jean-Claude Trichet said Friday. Speaking at the ECB Watchers' Conference, Trichet -- according to a text of his remarks provided by the ECB -- avoided touching on monetary policy in favor of a comparison of economic heterogeneity in the euro area as compared to in the U.S. * ECB LIIKANEN: ECB should rethink collateral policy * ECB CONSTANCIO: Will do whatever needed to deliver price stab. - To continue using nonstandard measures for fin.stab - Exclusive inflation focus not enough - Must lean against the wind to avoid bubbles * GERMANY: Bundestag votes in favour of motion to approve new aid for Greece * EFSF REGLING: The strategy adopted to protect euro is working - Real eurozone economy is doing surprisingly well - Countries making adjustments but more needed - Europe fiscal exit strategy on track, unlike US, Japan

EUROZONE: Releases in the eurozone Friday, * BBK sees Germany's real GDP growth 3.1% in 2011, 1.8% in 2012 - Average CPI +2.5% in 2011, +1.8% in 2012 - Unemployment well below 3 mln in 2012; rate 6.5% - Outlook for long upswing to facilitate urgently needed deficit cuts

EUROZONE: Data released in the eurozone Friday, * GERMANY: May HICP unrevised -0.2% m/m, +2.4% y/y, April +2.7% - Germany May final HICP matches mni median fcast * GERMANY: May WPI unch m/m, +8.9% y/y; April +9.2% y/y * FRANCE: Industry output -0.3% m/m in Apr vs revised -1.1% in Mar - Manufacturing output in Apr +0.2% m/m vs Mar -1.1% * ITALY: 1Q final GDP rose 0.1% q/q and 1.0% y/y, after gaining 0.1%q/q in the 4Q 2010, as exports and domestic demand grew. The q/q data was confirmed from preliminary figures released on May 13.

EUROZONE: Press pick-ups concerning the eurozone Friday, * IMF: Christine Lagarde's appointment as IMF Managing Director is a "done deal", Grigori Marchenko, the IMF candidate backed by the former Soviet block, has said, as he prepares to back out of the race, the Telegraph says. * IRELAND: Anglo Irish Bank is close to putting its entire $10bn portfolio of US commercial real-estate loans up for sale as soon as this month, the WSJ reports. Anglo Irish is expected to sell assets at a discount to face value but the proceeds will likely be buoyed by the recovery in commercial-property values in major cities, the paper says. * EUROPE: A crack opened in Europe's credit markets last week that could portend deeper trouble for the region's banks and governments, the WSJ reports. Investors balked at buying a E1 billion ($1.46 billion) bond offering by Banco Santander SA that was backed by debt of Spanish local governments, the paper says. That left a group of big European banks that managed the deal holding roughly E500 million of the debt. The lack of demand, unforeseen by Santander or the managers, underscores the jittery nature of the region's credit markets, the WSJ adds. * IRELAND: The French government has opened the door to a compromise in the stand-off over Ireland's corporate tax rate, saying it will take into account Irelands singular situation in deciding its stance, the Irish Times says.

YEN SUMMARY: Opened in early Europe at Y80.12 and Y115.91. - Dollar-yen had a mixed session in Asia trading in a range of Y80.01-Y80.46. The rate staged a run-up on interest from Japanese Importers and Tokyo fixing-related demand, but reversed its course after failing to take out stops at Y80.50. On the downside, option-linked demand is again seen at around Y80.00. Euro-yen eased in Asia from NY session highs of Y116.80. The rate was sold off after the Tokyo fix an weighed back by a weaker euro-dollar to trade at a low of Y115.86. The European session saw dollar-yen once again lacking direction trading in a tight range of Y79.96-Y80.19. Good sized bids are in place at Y79.70/50, offers at Y80.30. Euro-yen tracked euro-dollar to trade at a European session low of Y115.52 before recovering to Y115.80. Demand clearly seen around the Y115.50 levels with traders buying on dips. Momentum still remains on the downside with traders taking a cautious approach. Small offers at Y116.40/45 with a break out to larger offers at Y116.85/90.

JAPAN: Data released in Japan Friday, * Tertiary index data from the Ministry of Economy, Trade and Industry: - Japan Apr Tertiary Index +2.6% M/M Vs Mar Rev Record -5.9% - MNI Survey Median Forecast For Apr Tertiary Index: +2.7% * Capital investment by small manufacturers is expected to fall 4.1% on year in fiscal 2011 following +21.2% in fiscal 2010, data released by the government's Japan Finance Corporation show. * Corporate Goods Prices Index data from the Bank of Japan: - Japan May Corp Goods Prices +2.2% Y/Y Vs Apr +2.5% - Japan May CGPI Posts 8th Straight Y/Y Rise - MNI Survey Median Forecast For May CGPI: +2.5% Y/Y - Japan May CGPI -0.1% M/M Vs Apr +0.9% - Japan May CGPI Posts 1st M/M Fall in 8 Mo

JAPAN: Press pick-ups in Japan Friday, * JAPAN PRESS: Most opposition Liberal Democratic Party lawmakers are leaning toward a conclusion that forming a coalition government with the ruling Democratic Party of Japan will not work and are looking instead at less binding types of cooperation, the Nikkei reports. LDP lawmakers now plans to cooperate with the DPJ, after it chooses a new leader, on a second supplementary budget and other policymaking for the post-disaster reconstruction, it says. Depending on who that new leader is, and whether the DPJ radically alters its policy platform, a grand coalition could re-emerge, the report says.

CHINA/KOREA NEWS: * KOREA: The recent strong upward trend in South Korean consumer prices is likely to continue, due mainly to strong domestic demand, the Bank of Korea said. The outlook for South Korean growth appears "solid," the BOK added. The statement comes after the BOK surprised markets earlier by raising its base rate 25 basis points to 3.25%. Most analysts had expected the BOK to remain on hold, given signs of a slowdown in global growth and South Korea's dependence on exports. * CHINA: China must stick to its tightening policy bias to tame inflation, Xia Bin, a central bank advisor said Friday, calling for government to raise interest rates further. * CHINA DATA: The Chinese trade surplus expanded further in May to $13.05 billion, up from $11.42 billion in April. This indicates a strong contribution to growth from net exports in Q2 and will dampen somewhat concerns about a slowdown in Chinese growth and overtightening of government policy to fight inflation.

Rates in London Trading TIME EURO-USD USD-YEN CABLE EURO-YEN EURO-STG 0500 GMT 1.4487 80.10 1.6310 116.04 0.8882 0600 GMT 1.4495 80.12 1.6320 116.13 0.8881 0700 GMT 1.4496 80.10 1.6307 116.11 0.8889 0800 GMT 1.4458 80.09 1.6280 115.79 0.8880 0900 GMT 1.4481 80.05 1.6278 115.92 0.8896 1000 GMT 1.4484 80.15 1.6296 116.08 0.8888

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FinSys Update: US Govt Reports $57.6 Bln May Deficit;Lwr TARP | iMarketNews.com

FinSys Update: US Govt Reports $57.6 Bln May Deficit;Lwr TARP | iMarketNews.com
Friday, June 10, 2011 - 15:12

WASHINGTON (MNI) - The following are top events and news reported Friday ET in the global financial system by Market News International:

* The U.S. government ran a budget deficit of about $57.6 billion in May, vs. a deficit of $139.6 billion in the same month a year ago, thanks mostly to new lower estimate for the cost of the Trouble Asset Relief Program, the U.S. Treasury reported Friday. The Treasury said it now expects TARP to cost $48 billion. Outlays totaled $233 billion and total receipts $175 billion. The interest on Treasury debt securities is $30.9 billion, which is 13.3% of the total current month Federal Outlays. For the first eight months of the fiscal year, the government incurred a budget deficit of $927 billion, $8 billion more than the deficit recorded during the same period last year. [14:00 ET]

* New York Federal Reserve Bank President William Dudley Friday said he anticipates that economic growth will pick up enough in the second half of 2011 to sustain a moderate economic recovery. Still, the pace of recovery probably will be painfully slow for the many unemployed and underemployed workers, projecting "considerable labor market slack at the end of 2012." Dudley added that the recent disappointing data suggest that downside risks to the outlook have increased. He later said that it is important to watch a broad variety of inflation indications, noting some have "drifted upward" in the first half of 2011 but have come down in recent weeks. [11:11 and 09:00 ET]

* The New York Federal Reserve Friday announced that it plans to purchase approximately $62 billion in U.S. Treasuries in June. This represents $50 billion in purchases of the announced $600 billion purchase program, which will be completed by the end of June, and $12 billion in purchases associated with principal payments from agency debt and agency MBS expected to be received between mid-June and mid-July. [14:00 ET]

* With the economy struggling, the stock market plunging, and the debt limit deadline nearing, Vice President Joe Biden is expected to sharply accelerate the pace of budget talks he has been hosting since early in the spring. Biden held the sixth round of budget talks Thursday and lawmakers left the session saying the pace of the talks will accelerate sharply next week. Biden is expected to meet with lawmakers Tuesday, Wednesday and Thursday next week. The Biden talks are exploring a deficit reduction package that can be developed to coincide with this summer's vote on debt ceiling legislation. [13:35 ET]

* The Federal Reserve is seeking comment on a proposal to require top-tier U.S. bank holding companies with total consolidated assets of $50 billion or greater to submit annual capital plans for review. Institutions would be expected to have credible plans to have sufficient capital so that they can continue to lend to households and businesses, even under adverse conditions. Boards of directors of the institutions would be required each year to review and approve capital plans before submitting them to the Fed. In some cases, such as when institutions' capital plans have been rejected by the Fed, firms would be required to receive approval from the Fed before making capital distributions. [11:00 ET]

* The European Central Bank needs to raise interest rates "in a gradual and timely" manner, ECB Executive Board member Juergen Stark said Friday. Speaking at the ECB Watchers conference in Frankfurt, Stark reminded that interest rates are "at extremely low levels," and also said a gradual and timely exit from nonstandard measures is warranted to ensure inflation expectations remain firmly anchored. [10:38 ET]

* Earlier, Stark said European Central Bank staff forecasts of 1.7% average inflation in 2012 assume rising interest rates, suggesting that the central bank was planning to raise its policy rate further. Asked whether the 2012 forecasts, which show inflation falling well below the ECB's price stability target of close to but below 2%, means there is less pressure to act on interest rates, Stark stressed that the forecasts were not those of the Governing Council. [Updated 09:42 ET]

* In an unusual move Friday, ECB Vice President Vitor Constancio issued a "clarification," which he said "replaces his earlier statement of today regarding possible private sector involvement in the Greek adjustment programme." In the clarification, Constancio stated: "President Trichet made clear that the ECB's Governing Council excludes all concepts that are not purely voluntary or have any element of compulsion, that entail any credit event or that entail any default or selective default." [Updated 11:29 ET]

* The European Central Bank does not oppose a voluntary private sector contribution to a new Greek bailout package, but a large-scale deal appears unlikely, ECB Executive Board member Juergen Stark said on Friday. While he personally favors private sector involvement for political, though not economic reasons, Stark warned that the recent public debate on the topic is diverting key resources from the main goal of implementing Greece's EU/IMF program, which he said can assure debt-sustainability. [10:16 ET]

* The UK's growth rate in the three months through May picked up, after the hit on output from the Royal Wedding Bank Holiday in April, according to the National Institute of Economic and Social Research data. NIESR said growth in the three months through May rose to 0.4% from just 0.1% in the three months through April. [10:00 ET]

* The latest municipal bond flows show retail investors are returning to the municipal bond market, and EPFR Global analyst Cameron Brandt expects them to stay. "Retail investors appear to be warming to U.S. debt in general," noted EPFR Global Director of Research Cameron Brandt. Asked what it meant for retail investors flows going forward, Brandt told Market News International that "with yields rising and the default rate nowhere near as bad as feared, retail investors -- usually the back-bone of this market -- are coming back." [13:07 ET]

* As the midnight Friday deadline approaches for submitting nominations to take over leadership of the International Monetary Fund, the short-list of candidates is likely to remain short, and unless emerging markets join forces in coming days, France Finance Minister Christine Lagarde seems likely to keep the post for Europe. Bank of Mexico Gov. Agustin Carstens is the only viable challenger to Lagarde, and his campaign has gathered steam in recent days as he travels the world in search of support, but broad backing from emerging markets has been absent. [12:58 ET]

** Market News International Washington Bureau: 202-371-2121 **