July 16th, 2010 10:00:19 GMT

EUR/GBP extends rally as stops tripped

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EUR/GBP stops through .8430 have been tripped and we’ve been as high as .8447 so far. This has helped pressure cable which has been down to session low 1.5367.  As aforementioned talk earlier of buy orders down at 1.5350/70.  Stops probably not far below there, but no confirmation of exact level.

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July 16th, 2010 09:45:32 GMT

Greece To Sell E1.5bln 13-Week T-Bills On July 20:PDMA

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LONDON (MNI) – Greece is planning to sell E1.5 billion in 13-week
T-Bills on Tuesday July 20, the Public Debt Management Agency (PDMA)
said in an emailed statement Friday.

The auction follows last week’s sale of 26-week T-bills for a total
of E1.625 billion at an average yield 4.65%, with a cover ratio of 3.64
times.

The amount sold was more than the E1.25 billion originally
indicated by the debt agency, with strong participation seen from
foreign accounts, PDMA chief Petros Christodoulou told Market News
International following the T-bill sale.

The T-bill sales come as the Hellenic Republic has to repay E1.95
billion in two payments due 16 July and a single payment of E2.4bln due
on 23 July. In addition, the T-bill sales are also seen helping Greek
banks with their liquidity management.

Whilst the EU-IMF’s E110 billion emergency funding programme was
designed to cover Greece’s financing needs until the end of Q1 2012, it
was also due to act as a shield and help Greece amke a full return to
markets as soon as possible, which is likely to be in 2011.

–London newsroom: 00 44 20 7862 7494; email: nshamim@marketnews.com

[TOPICS: MNXAU$,M$X$$$,MFXBO$,MGX$$$,M$$FI$]

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July 16th, 2010 09:45:31 GMT

Germany To Tap 1.75% April 2020 Linker By E1 Bln On July 21

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FRANKFURT (MNI) – Germany will tap its 1.75% coupon April 2020
inflation-linked bond for E1 billion on July 21, the Bundesbank
announced Friday.

The top up will bring total volume of the issue to E10 billion.
Bids are due by 10:00 a.m. GMT on Wednesday, July 21. The auction
settled on Friday July 23. The bond is linked to euro area HICP
excluding tobacco.

The security matures on April 15, 2020. Germany announced in its
most recent issuance calendar that it would issue E3 to E4 billion in
linkers this quarter. This is its first linker issuance in Q3.

At the last auction of this security, on June 9, the government
sold E995.5 million out of a desired E1 billion tap, with a bid/cover
ratio of 1.9 and a real average yield of 0.86%.

–Frankfurt Newsroom +49 69 72 01 42: email: fftmail@marketnews.com–

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

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July 16th, 2010 09:39:39 GMT

EUR/GBP firmer on day

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Presently at .8406 from early .8377.  Earlier this morning had been hearing reports of sell orders up at 8400/20 which have so far just about managed to cap rally.

Talk of stops through .8430.

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July 16th, 2010 09:35:26 GMT

ECB Honohan: Ireland Has Already Stress Tested Key Banks

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–Says Ireland Budget Deficit Efforts “Broadly On Track”

BRUSSELS (MNI) – The two Irish banks that are currently being
stress tested at the European Union level have already passed stringent
national stress tests, European Central Bank Governing Council Member
Patrick Honohan said on Friday.

Irish banks AIB and Bank of Ireland are being stress tested by the
Committee of European Banking Supervisors, or CEBS, as part of a
Europe-wide stress testing exercise, the results of which will be
published July 23.

“We have already stress tested these banks,” Honohan said,
according to the text of a speech at the presentation of the central
bank of Ireland’s annual report.

“Indeed, the severity of the tests we conducted earlier on loan
losses exceeds that of the CEBS version, although CEBS has extended the
test to reflect events in the sovereign debt markets,” he said.

Honohan noted that Ireland had already taken action on its banking
system, setting higher capital requirements for its banks in March this
year.

“We expect that the banks will meet the capital requirements set
out by us, which we believe are sufficient to withstand future stress
scenarios,” he said.

But he said that the banking sector remains a key concern for him,
along with the issue of Ireland’s public finances and restoring the
country’s competitiveness.

Ireland’s economy is currently experiencing a deep recession, as a
10-year boom, fuelled by cheap credit and rising property prices,
reverses.

“The failures of the banking system here have rocked the economy
and the public finances, with severe impacts on all members of society,”
Honohan said.

“As for the public finances, it remains critical that the
government sticks firmly to the fiscal adjustment programme that it has
embarked on,” Honohan said, adding that “the budgetary arithmetic is so
far broadly on track.”

“This path, difficult as it may be, is the surest route to
supporting the recovery in confidence in the Irish economy both
domestically and internationally,” he added.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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

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July 16th, 2010 09:25:22 GMT

Repeat: Draghi: Must Cut Deficits, Withdraw Monetary Stimulus

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–First Ran At 1300 GMT/0900 EDT Thursday

ROME (MNI) – The Eurozone has no choice but for its governments to
cut budgets and for the European Central Bank to withdraw its “strongly
expansive” monetary policy, ECB Governing Council member Mario Draghi
said Thursday.

“The economic policy path today is narrow and arduous,” Draghi, who
heads the Bank of Italy, said in the text of a speech to a conference of
the Italian Bankers’ Association. “There are no alternatives to
restoring the health of public budgets, to the withdrawal of monetary
expansion, to the recapitalization of the banking system, and to the
return to a culture of stability, which was the founding characteristic
of the euro area.”

Once the recovery is confirmed, “it will be necessary to resume the
gradual exit from non-conventional monetary measures,” Draghi said.
“Even with the pause of the past week, following the renewed strong
tensions that originated in the market for Greek public securities, this
process has been underway since the end of 2009.”

And, “an acceleration of the end to public budgetary imbalances is
indispensable,” he said. “The effect on the recovery will be positive if
the return to [fiscal] health contributes to a reduction of spreads on
sovereign securities.”

Despite loose monetary policy and burgeoning public debt and
deficits, “inflation expectations [in the Eurozone], unlike in other
countries, remain solidly anchored,” Draghi said.

Draghi urged “maximum transparency in the communication” of
European bank stress test results. The tests will apply to 91 European
banks accounting for 65% of system assets, and the results are scheduled
to be published July 23.

“On that date, European governments must be prepared to intervene
with the appropriate measures, wherever the results show capital
weakness and market solutions are not available.”

With regard to Italian banks, Draghi said that while results will
differ from institution to institution, “I am confident that they will
show that the capital resources of individual businesses are adequate.”

Draghi said that the “selectivity” of Italian banks in calculating
risk capital “is reflected in a quality of capital at Italian banks that
is comparatively high and will help facilitate the move to new, more
stringent Basel [bank capital] standards.”

Moreover, he said, the Italian banking system has remained largely
in the core business of traditional loan granting, and therefore the
stiffening of capital requirements in the face of trading activity
should have a “smaller impact” compared with other countries.

On the economic front, Draghi said the global recovery is “uneven
and uncertain, but it is continuing.” The recovery in Europe, which is
“driven by international trade, remains exposed to risks. Among them, he
noted, are the “lingering weakness of domestic demand in our countries;
turbulence on financial markets which, still fragile, overreact to the
heightened perception of sovereign risks; [and] possible inflationary
tensions from emerging countries, which could induce a more restrictive
policy.”

In Italy, renewed vigor in foreign trade is helping drive the
recovery, Draghi said. He noted that the Bank of Italy’s Economic
Bulletin, to be published today, will project an increase of 9 percent
in export volume this year and 5% in 2011. Still, he said, “consumption
and investment remain weak, because real incomes are stagnating [and]
the employment outlook is uncertain.”

Draghi said that the ECB’s government bond purchases “prevented a
collapse of the European financial system, preserving the monetary
policy transmission mechanism.” The bank’s commitment to sterilize the
bond buys “remains firm,” he said.

He noted that after the E442 billion LTRO expired July 1, the large
volume of cash leaving the system has not been fully replaced by
subsequent refinancing operations.

“Since some counterparties still have difficult access to market
funding, that translated to a moderate rise in money market rates, on
the order of 10 basis points,” Draghi noted. “The direction of monetary
policy should not be altered because of the conditions of these marginal
counterparties,” he said. “Their problems must be confronted by the
[corresponding] national authorities.”

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

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July 16th, 2010 09:21:52 GMT

Euro zone May trade balance -3.4 bln

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Versus median forecast of +1.5 bln.   Exports rose 23% from year earlier, with imports up an even heftier 30%. 

The market liked the surge in imports, seeing it as a signal of rising domestic demand.

EUR/USD been as high as 1.2980 in wake of data, presently at 1.2972.

Sell orders seen 1.2990 thru 1.3020.

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