February 16th, 2011 14:25:39 GMT.

US DATA: Jan industrial production -0.1% vs +1.2%….

by

US DATA: Jan industrial production -0.1% vs +1.2% Dec (was +0.8%),
putting Cap Util at 76.1%. Thus the Jan drop is not as bad as on its
face, and the rest of the drop probably reflects weather. In IP, mfg
+0.3%, mining -0.7%, utilities -1.6% (after 2 mos of surges). Ex motor
vehicles and parts, factory production rose 0.1% in Jan. Fed said
utilities dropped as “temperatures moved closer to normal after
unseasonably cold weather boosted the demand for heating in Dec.”

2011-02-16T14:25:39+0000

February 16th, 2011 14:19:01 GMT.

Damn, I was hoping for some MMA at 84.00

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Well hopes for a major test of 84.00 and the large supply at that level and just above look to be dashed as US industrial production came in below expectations at -0.1%. It was the first fall in production in 18 months.

The 83.60 area remains support for USD/JPY near-term though stops from short-term specs are sure to be building…

USD/JPY is at 83.88.

mma

2011-02-16T14:19:01+0000
2011-02-16T14:15:09+0000
2011-02-16T14:11:02+0000

February 16th, 2011 14:05:58 GMT.

Update: Merkel Defends Choice Of Weidmann As BBK President

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–Adds Media Report On ECB Board Member Stark To Story Sent 12:47 GMT

BERLIN (MNI) – German Chancellor Angela Merkel on Wednesday
defended her decision to make her 42-year old top economic advisor, Jens
Weidmann, the next president of the Bundesbank.

The opposition parties had warned that sending a member of
government directly to the top of the Bundesbank could impair the
independence of the central bank.

Merkel reminded that Weidmann had already worked for the Bundesbank
before joining the government. “If there is anybody with this background
who is committed to preserving the independence of the Bundesbank and
the ECB, then it is Weidmann,” she argued.

“Weidmann will speak out in the ECB for a culture of stability,”
the chancellor predicted.

Finance Minister Wolfgang Schaeuble, speaking at the same press
conference, reaffirmed that the succession of ECB President Jean-Claude
Trichet will be decided only once a comprehensive package to solve the
current debt crisis in the Eurozone had been agreed amongst member
states.

Incumbent Bundesbank president Axel Weber had declared last week he
would step down in April of this year, one year earlier than the
scheduled end of his term, and would no longer be a candidate for the
ECB top job when Trichet retires this autumn.

German weekly Die Welt reported Wednesday that the government had
given up its plan to move a German to the top of the ECB. ECB Executive
Board member Juergen Stark, a German national, is not available to run
for the job, the paper wrote citing government sources.

A government spokesman said earlier this week that the nationality
of the next ECB president is not so important, but that the candidate
should share Germany’s views on monetary policy.

“For the federal government, it always was and is key that Mr.
Trichet’s successor shares our views on a stable currency…and the
fight against inflation,” spokesman Steffen Seibert said. “It is not
first and foremost a question of which passport” the candidate holds, he
stressed.

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

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

2011-02-16T14:05:58+0000

February 16th, 2011 14:01:43 GMT.

USD/JPY reaches 83.97

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Hedge funds have been buyers in the wake of the US data. So far, the Japanese offers are holding fast. There are 500 million dollars on offer on EBS alone at 84.00.

2011-02-16T14:01:43+0000

February 16th, 2011 13:54:17 GMT.

EUR/USD runs in to central bank buying again

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Traders report the BIS on the bid here in the 1.3460s as the greenback strengthens following the “upbeat” housing data. Lord knows, the US needs more houses…

Traders report heavy sales in EUR/USD from a US heavyweight. Expect more bids toward 1.3450. Stops below…

2011-02-16T13:54:17+0000

February 16th, 2011 13:50:44 GMT.

Cable bids ahead of 1.6000

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My skepticism on cable yesterday proved well founded….

Here we are less than 18 hours later and we’re testing the other side of the range, nearly 2-cents lower.

Bids are eyed in the 1.6000 area this morning, traders report. More are seen toward 1.5980 and 1.5960/65.

2011-02-16T13:50:44+0000

February 16th, 2011 13:45:02 GMT.

Barclays, RBS Bring Forward BOE Rate Hike Call To May

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LONDON (MNI) – The Bank of England’s February Inflation Report
and the subsequent press conference by Bank of England Governor Mervyn
King may have been viewed as dovish in some markets, but following its
publication economists at Barclays and Royal Bank of Scotland have
brought forward their call for the first rate hike to May.

The Inflation Report stated there was a “roughly equal” chance of
inflation being above or below target two year and three years ahead on
its market rate forecast. This forecast was conditioned on the first
hike coming in the second quarter of this year and then a steady move
higher in Bank Rate.

Barclays’ economists had been forecasting a November hike, but
brought it forward to May.

“We now expect the MPC to raise Bank Rate by the middle of the
year, taking the first step on a gradual tightening path. Specifically,
we forecast 25bp increases in May, August and November, taking Bank Rate
to 1.25% by the end of the year,” Barclays economist Simon Hayes said in
a note.

Economists at Royal Bank of Scotland, who had also predicted a
November hike, have now switched to May.

They said in a note there were “modest risks of an earlier move in
March”.

RBS economists noted that while the modal (most likely) forecast in
the February Inflation Report was for CPI to come in below target, at
around 1.7%, two years ahead the skew was to the upside and the mean
forecast would be around the 2.0% target on market rates.

The Inflation Report, therefore, does on this view support market
rate hike pricing.

–London Bureau; Tel: +44207 862 7491 email: drobinson@marketnews.com
[TOPICS: M$$BE$,M$B$$$]

2011-02-16T13:45:02+0000

February 16th, 2011 13:43:08 GMT.

USD/JPY runs into wall of offers once again

by

I’d love know what they are doing with all the USD/JPY that has turned over between 83.60 and 83.90 in the last 24-hours. The amounts are truly impressive and suggest that one side has to give before long.

84.00 barriers are rumored as well as the more typical corporate hedging from Japanese exporters into strength in USD/JPY.

Supply is rumored all the way up to 85.00 in size, so any USD/JPY rally will be a grinding affair. We trade now at 83.91.

2011-02-16T13:43:08+0000
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