Forex News | Currency News by Forexlive

Apparently a few fund managers waited until today to square up their month-end needs.

USD/JPY and AUD/USD saw the biggest flows apparently, with USD/JPY falling something like 60 pips to the 90.80 area, I’m told…

Moral of the story: Never leave large flows to be dealt on market holidays!

FRANKFURT (MNI) – The European Central Bank announced Monday its
intention to re-absorb the liquidity injected through its government
bond purchase program.

The operation, to be conducted on Tuesday at 9:30 GMT, will be in
the form of a variable-rate tender with a maximum bid rate of 1.00%, the
bank said. It intends to mop up E35 billion in liquidity, equavalent to
the amount of bonds purschased through the Securities Market Program in
the previous week, it said.

The liquidity will be held for one week at the bank as a term
deposit. These fixed-term deposits can be used as collateral for the
Eurosystem’s credit operations, the bank said.

The ECB said it will conduct another liquidity-absorbing operation
next week.

–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com

[TOPICS: MGX$$$,M$$FX$,M$X$$$,M$G$$$,M$$EC$]

The ECB should be printing money left and right, the NY Times seems to conclude.

The sovereign debt crisis may prompt a double-dip, Wen Jiabao warns.

Comments from our Spanish readers have showed this to be the case for months… Spaniards want early elections.

Trichet hits back at critics..

BERLIN (MNI) – German President Horst Koehler on Monday announced
his resignation after being criticized over remarks he made about
Germany’s participation in the war in Afghanistan.

The role of the German president is mainly ceremonial.

“I regret that my remarks in an important and difficult question
for our nation has led to misunderstandings,” Koehler said in a
statement.

The assumption that he was in favor of an unconstitutional
deployment of German armed forces because he wanted to protect the
country’s economic interests lacks any justification and shows little
respect for the highest government office, Koehler said.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: MGX$$$,M$G$$$]

VIENNA (MNI) – The current foreign exchange value of the euro is
very near the rate that the economic fundamentals would suggest,
European Central Bank Governing Council member Jozef Makuch said Monday.

Speaking to reporters on the margins of a conference sponsored by
the Austrian National Bank, the head of Slovakia’s central bank also
voiced support for a European rating agency.

Asked whether he was concerned with the recent decline of the euro,
Makuch replied, “the euro is very close to fundamentals, it is a good
exchange rate, supporting our exports. I am happy with the rate.”

“I think it is a really good idea to have some new European agency,
rating agency, but you need to have some time to create it and to create
the measures,” he said.

It is too early to say whether such an agency should be public or
not, he said, “but I prefer a solution of a European rating agency.”

Citing the positive Japanese experience, he added, “I don’t think
it will be bad in Europe to have a European agency.”

–Frankfurt bureau tel.: +49-69 720142. Email: dbarwick@marketnews.com

[TOPICS: M$$CR$,MGX$$$,MT$$$$,M$$EC$,M$X$$$]

BERLIN (MNI) – The German government on Monday reaffirmed the need
to start consolidating public budgets next year in order to achieve
sustainable economic growth.

“There is no sustainable growth which is based on persistently
inflated fiscal policy,” government spokesman Ulrich Wilhelm said at a
regular press conference here.

Without budget consolidation, the government will lack the strength
to undertake the necessary investments, he argued. This would lead to a
“severe threat to future growth possibilities and would be certainly
punished by financial markets,” Wilhelm said.

German Economics Minister Rainer Bruederle, however, warned in a
newspaper interview published Monday that authorities should not
endanger the German economy by cutting expenditures too much.

“We need to be careful about everything that supports growth,”
Bruederle told German business daily Financial Times Deutschland (FTD).
“We must not destroy ourselves through consolidation,” he said.

The government should not focus too much on cutting expenditures
but should also keep the competitiveness of the country in mind, the
minister urged.

Meanwhile, European Union Budget Commissioner Janusz Lewandowski
told German daily Tagesspiegel in an interview published Monday that he
was worried “a policy of overdrawn consolidation could lead to a
deflation” in the EU.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: MGX$$$,M$X$$$,M$G$$$,MFX$$$,MFGBU$,M$$CR$]

BERLIN (MNI) – German Economics Minister Rainer Bruederle warned in
a newspaper interview published Monday not to endanger the German
economy by cutting expenditures.

“We need to be careful about everything that supports growth,”
Bruederle told German business daily Financial Times Deutschland (FTD).
“We must not destroy ourselves through consolidation,” he warned.

The government should not focus too much on cutting expenditures
but should also keep the competitiveness of the country in mind, the
minister urged.

He again rejected calls for tax hikes to consolidate public
budgets. “Tax hikes are definitely the wrong way to go,” he reckoned.
“We [would] only reduce domestic demand further.”

Finance Minister Wolfgang Schaeuble said in a newspaper interview
over the weekend that it would be a difficult task for the federal
government to meet the country’s debt limitation rules, “but it is also
not impossible.” He did not rule out the abolition of some tax
subsidies, in addition to spending cuts.

The German debt limitation rule stipulates that the structural
deficit of the federal budget must be no more than 0.35% of GDP starting
in 2016. From 2011 until 2016, the federal net new borrowing must be
gradually brought in line with that ratio.

The structural deficit limit of the 16 states is set at 0.0% of GDP
starting in 2020. From 2011 until 2020 the states must gradually lower
their structural deficits to zero.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: MGX$$$,M$X$$$,M$G$$$,MFX$$$,MFGBU$]

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