July 9th, 2010 18:53:43 GMT

Real money selling some EUR/USD for a change

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This week US fund managers have pretty much been one-way traffic in EUR/USD; they been steady buyers days after day. For the first time this week we’ve picked up talk of some decent real money selling in the 1.2640s. Not doing much as we remained trapped in a narrow range below the 1.2650 level. EUR trades now at 1.2640.

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July 9th, 2010 17:12:41 GMT

Cable tests the trendline after breaking 1.5080 range lows

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Cable slipped as low as 1.5060, testing the uptrend in place since the beginning of June.

One round of stops in the 1.5065/7 area has already been triggered an another lies just below w1.5050. EUR/GBP is grinding through resistance and trades now at 0.8388. Major resistance lies at 0.8420/25.

EUR/USD remains capped around the 1.2650 area and trades now at 1.2638.

6 Comments

July 9th, 2010 15:55:33 GMT

Update Constancio: Fixing Banks Balance Sheets Key To Growth

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FRANKFURT (MNI) – Fixing banks balance sheets is key for an ongoing
recovery, European Central Bank Vice-President Vitor Constancio said on
Friday.

“Repairing balance sheets of banks and making banks more resilient
is a crucial prerequisite for the resumption of growth and for financing
the reallocation of resources from the non-traded to the traded
sectors,” Constancio said.

“Many policy initiatives have already been taken in this respect,
ranging from the establishment of “bad banks” to injections of capital
and government guarantees’ for bank debt,” he said.

More is in the cards now with the Eurozone undergoing banking
stress tests and policymakers assuring that national governments stand
ready to meet any recapitalization needs.

Similarly, “convincing fiscal consolidation to redress the fiscal
imbalance is essential,” Constancio said.

“Given the impairment of the credibility of the fiscal policy in
many countries, postponing adjustment is simply no longer an option.
Markets need to be convinced right now,” he asserted.

The ECB vice-president warned that a number of countries facing
fiscal consolidation challenges are set to face slow growth in domestic
demand in the months ahead.

“Countries that have accumulated imbalances thus now face a long
and painful process of adjustment to more warranted levels of spending
and debt in both public and the private sectors,” he predicted.

“A process of de-leveraging and balance sheet reparation will have
to take place in several cases. These adjustments will inevitably entail
a period of low growth in domestic demand,” Constancio noted.

To counter weak demand, “corrective adjustments of prices and
wages” are needed to boost exports and rebalance economies in question,
he said.

Overall, the euro area has “responded adequately” to the crisis and
could emerge as a stronger union if appropriate reforms are enacted,
Constancio said.

“Even though one might occasionally speak of some procrastination,
which is understandable in a complex framework integrating several
countries, important, bold decisions have been taken and new reform
processes have been launched,” he said.

“The currency union now must “take necessary and difficult measures
to restore fiscal positions and eliminate private sector imbalances” and
“put in place a framework of economic governance and a set of policies
to prevent a recurrence” of previous shortfalls, he added.

Constancio dismissed concerns over the survival of the euro.

“I think the opposite will turn out to be true. When both
challenges are met, the result will be a euro area that will be far more
robust, with a more resilient financial system, and with sounder fiscal
positions and a more balanced development across countries,” he said.

Constancio also emphasized that the central bank’s own action
during the crisis had always been in line with its price stability
mandate.

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

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

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July 9th, 2010 15:53:32 GMT

EUR/GBP well supported late in Europe

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As hopes for a credible stress test rise, EUR/GBP rises with it. The cross has probed through resistance at 0.8380 and looks like it might try and end the week above that level. A move back through 0.8420/25 would further reduce pressure on the cross and suggest a more significant rally could unfold.

1.2650 sell orders in EUR/USD are helping push Cable lower as cross plays unfold in the individual components If EUR/USD can’t go up but EUR/GBP continues to rise, GBP/USD has to go lower…There are a lot of moving parts here, so anyone of them could impact the other on the near-term, like any Rube Goldberg-type device.

7-9 eurgbp

5 Comments

July 9th, 2010 15:45:39 GMT

EMU Data: MNI Survey Of Econ Data Forecasts, July 14

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Final HICP June
%mom %yoy

Median* 0.0 1.4
High forecast 0.1 1.4
Low forecast -0.2 1.3
Number of responses 13 16

Barclays Cap. 0.0 1.4
Action Economics 0.0 1.4
Commerzbank na 1.4
Capital Economics 0.0 1.4
West LB 0.0 1.4
JP Morgan 0.0 1.4
Nomura na 1.4
4Cast -0.2 1.4
Natixis 0.1 1.4
BNP Paribas 0.0 1.4
UBS 0.0 1.4
Unicredit na 1.4
DZ Bank 0.0 1.3
Goldman Sachs -0.1 1.4
Citi 0.0 1.4
Soc. Generale 0.0 1.4

———————————————————————-

* Median is based on above forecasts and is not intended to represent
a consensus.

The survey was conducted on Friday, July 9.

[TOPICS: M$XDS$,M$X$$$]

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July 9th, 2010 15:35:08 GMT

Germany Data: MNI Survey Of Econ Data Forecasts, July 13

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ZEW July
expectations current conds

Median* 25.1 -1.5
High forecast 40.0 1.0
Low forecast 20.0 -4.0
Number of responses 13 7

Barclays Cap. 30.0 na
Action Economics 25.5 -3.0
Commerzbank 20.0 na
Capital Economics 27.5 na
West LB 23.0 na
4Cast 25.1 -1.5
Natixis 20.0 -4.0
BNP Paribas 21.7 -0.9
UBS 30.0 0.0
Unicredit 22.0 na
DZ Bank 27.0 1.0
Citi 40.0 na
Soc. Generale 25.0 -3.0

———————————————————————-

* Median is based on above forecasts and is not intended to represent
a consensus.

The survey was conducted on Friday, July 9.

[TOPICS: M$XDS$,M$X$$$]

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July 9th, 2010 15:32:55 GMT

Cable sneaking lower late in London

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Is cable getting ready to make a raid on stops in the 1.5060 area? Knowing the pound like I do (it has not been a pretty relationship…) It will probably go down just far enough to stop out a slew of longs before rebounding right back into the prevailing 1.5080/1.5230 range…It’s what cable does.

It trades now at 1.5100.

6 Comments

July 9th, 2010 15:28:30 GMT

Euro stability fund could be used to recapitalize banks

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So says the French market regulator, according to Reuters.

I thought the fund was to ward off sovereign debt crises? Now it’s to bailout the banks?

Sounds like the incredible transformation that the TARP program underwent in the US…A big grab-bag for favored constituencies.

1 Comment

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