I told you I thought I was going to be disappointed re the EUR/GBP barrier at .8125 being “popped” this morning, and looks as though the feeling in my water was right.

From session low .8130 we’re back at .8155.  Booooo hiss.

Meanwhile EUR/USD has extended rally, presently at 1.3200. Talk of buy stops now through 1.3220.

–Comments From Interview With Newcastle Journal

LONDON (MNI) – Bank of England Monetary Policy Committee Member
Martin Weale has conceded that the growth forecast by the BOE in the
February inflation report had failed to materialise.

The BOE had forecast growth of 0.5% in Q1, but official figures
released this week showed that the economy had in fact contracted 0.2%,
tipping the economy back into recession.

“We’ve been forecasting growth that hasn’t materialised… This is
a situation which is historically very unusual and as far as we could
tell, the economy was in healthier shape than we thought it would be
looking ahead from late last year … but like all forecasts that
doesn’t necessarily mean what is predicted is going to happen,” Weale
told the Newcastle Journal newspaper.

Weale also said that household deleveraging had left consumer
spending at a low.

“Overall saving and people paying off their debts has meant that
consumer spending has been at a low. This is coupled with the fact that
many employers are freezing wages while the cost of living is going up,”
he added.

The policymaker also said that the crisis in the euro zone had
sucked some of the strength out of the UK’s economic recovery.

“It’s also made much harder when so much of the rest of Europe is
in recession or heading into it,” Weale said.

Weale said that the current recession will not have the same impact
on the economy as the one that hit the country in the wake of the
collapse of Lehman Brothers in 2008.

“The shrinkage has been much less than one quarter of falling
output in 2008 – however, we cannot take things for granted,” Weale
said.

–London bureau: +4420 7862 7492; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,M$$BE$]

DAX now down only -0.25%, Spain’s IBEX only down -0.8%.

EUR/USD up at 1.3187.

C’mon everybody let’s chant, BIS!! BIS!! BIS!!

Sovereigns own this market!!

BRUSSELS (MNI) – EU Internal Markets Commissioner Michel Barnier on
Friday vowed to press ahead with plans to regulate money managers and
other financial institutions engaged in securitisation, securities
lending and repo transactions in the E46 trillion ‘shadow banking’
sector.

A key thrust of the Commission’s plans to regulate these activities
will be to give supervisors the ability to “know and regulate leverage”
in securities lending and repo activities, which Barnier said can “lead
to herd-like behaviour.”

“These uncontrolled activities and practices played a decisive
role” in the recent sub-prime crisis, Barnier said.

Brussels also wants to stop special purpose investment vehicles
from acting simply as vehicles for regulatory arbitrage, he said.

G20 countries decided to tackle the shadow banking sector last year
after agreeing that financial market practices such as securitisation,
securities lending, and repo trades could pose systemic risks to the
financial system.

The Commission has identified investment vehicles, money market
funds, exchange traded funds, hedge funds and insurance companies
providing credit guarantees as entities particularly active in the
field.

Barnier put forward a discussion paper on the Commission’s thinking
about the issue in March and may propose legislation next year.

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

FRANKFURT (MNI) – The Swiss franc remains overvalued at CHF1.20 per
euro and represents “major challenges” to the economy, Swiss National
Bank Chairman Thomas Jordan said Friday, reiterating the central bank’s
commitment to enforce its minimum exchange rate policy “with utmost
determination”.

In the text of a speech to shareholders, Jordan underlined the
SNB’s ongoing pledge to buy foreign currency to maintain the minimum
exchange rate target “without any restriction”.

“However, in the past few months there have been growing signs that
the economic situation in Switzerland has stabilised as a result of the
minimum exchange rate,” Jordan said. “Thus the minimum exchange rate of
CHF1.20 per euro has, to date, proved to be effective.”

Jordan also took note of the “highly uncertain” international
economic environment, calling the ongoing European sovereign debt
crisis “the biggest risk”.

“It is unclear whether the measures taken so far will really
succeed in defusing the situation permanently,” he said. “Consequently,
the sovereign debt crisis still has the potential to seriously affect
the international financial system as well as international economic
development.”

The SNB chairman confirmed the central bank’s economic forecast of
close to 1% economic growth for Switzerland this year, but cautioned
that risks from the external environment could make it a difficult year.

Recent forecasts show no inflation risks in Switzerland “in the
foreseeable future,” Jordan said. “The forecast also makes it clear that
the threat of a deflationary trend has been kept in check. Inflation
rates are only temporarily negative.”

Still, the central banker stressed that the SNB stood ready to act
if necessary.

“If developments in the international economy are worse than
foreseen, or if the Swiss franc does not weaken further as expected,
renewed downside risks for price stability could emerge,” Jordan said.
“Should the economic outlook and the threat of deflation require it, the
SNB is prepared at any time to take further measures.”

Jordan added that Swiss monetary policy was likely to remain
expansionary “for a while yet”, stressing that low rates were
“indispensable from the point of view of the economy as a whole”.

However, while low rates were contributing to financial stability
in the short term, risks of imbalances could build if rates stayed low
for too long, the central banker noted.

“We are – in fact – currently observing increasing signs of adverse
developments in the Swiss mortgage and real estate market for
residential property,” Jordan said. “The explanatory power of
fundamental factors in explaining the developments in residential real
estate prices is decreasing steadily, while the volume of mortgage loans
in comparison to GDP has never been so high.”

“Should these imbalances increase further, considerable risks to
financial stability could emerge,” he warned.

– Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com –

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

BERLIN (MNI) – Small and medium-sized enterprises in the Eurozone
have increasing problems getting bank loans, according to a survey by
the European Central Bank released Friday.

The survey showed that Eurozone SMEs’ external financing needs
increased between October and March. At the same time, access to bank
loans continued to deteriorate.

On balance, firms reported less availability of bank loans (20%
compared to 14% in the previous survey). Moreover, the survey results
point to somewhat higher rejection rates when applying for a loan (13%
versus 10%). The percentage of respondents reporting access to financing
as their main problem remained broadly unchanged (17% versus 16%).

The survey, conducted between February 29 and March 29, covered a
sample of 7,511 firms.

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

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

ITALY DATA: February nominal retail sales rose 0.6% m/m in seasonally
adjusted terms, and gained an unadjusted 0.1% y/y, up from -1.1% y/y
in December.
–Food sales rose 0.6% m/m; non-food sales gained 0.1% m/m.
–The 3-month moving average fell 0.2% in the December-to-February
period compared with the previous three months.

• Currency cap is extreme measure, cannot be set up for any desired level free of risk
• Can take further measures, if deflation risk and economic outlook so require
• Reasons for confidence in Swiss economy but still sees risks
• Sees potential for downside risks to price stability if franc does not weaken further as expected
• Sees no inflation risk for foreseeable  future, threat of deflation kept in check
• Swiss interest rates likely to remain low for a while, carries risk of longer-term imbalances

EUR/CHF cops a deaf’un to the comments, unchanged on the day at 1.2014.

• Will take time for effect of easing to show on economy
• BOJ’s long-term forecasts do not factor in planned sales tax hike
• Recklessly easing without eye on time lag of policy effect could risk destabilising economy (oh c’mon be reckless, let loose with gay abandon and help the poor USD/JPY bulls)
• Buying JGBs at a pace exceeding appropriate levels could destabilise economy
• Uncertainty on public finances could rein in incomes, become source of deflation
• BOJ’s JGB holdings likely to breach banknote rule by year-end or March of next year
• No change in BOJ’s commitment on time frame for easy policy
• Want to carefully, calmly assess effects of policy, risks to economy and prices

USD/JPY touch lower at 80.70 from the 80.85 which greeted me first thing.  Shirakawa’s cautious tone won’t be helping USD/JPY bull’s cause.

But EUR/USD sits serenely at 1.3177.  Go figure.

DAX down around 1%, Spain’s IBEX down around 1.9%.

UGHHHH!!!

Up from 22.9% in Q4 2011 and worse than Reuters’ median forecast of 23.5%.

It never rains, it pours

Sits at 1.6172, exactly where it was when I arrived.

Given that we didn’t soar above 1.6200 yesterday after reports of “good names” buying circa 1.6195/00, I’m officially upgrading myself from a ”mediocre name” to a ”jolly decent name”

If you weren’t reading the product yesterday morning you won’t have a clue what I’m jabbering on about.  Even if you were reading it, you still might be a little confused

Right, yesterday we had reports of buy stops gathered up in 1.6210/20 area.  Guess they’re still there, although as yet I don’t have confirmation.

On downside I’d hazard a guess trailing sell stops most probably through 1.6140 (again no concrete confirmation)  1.6142 is the 50% fibbo retracement of 1.6076-1.6208 rally.

It’s nearly time for a “pop goes the weasel” headline.

I’d hazard a guess they mean on the EUR/GBP cross, which is down at .8133 from early .8150, hovering just above touted .8125 barrier option interest.

How exciting!!!

Why do I get this feeling I might be disappointed?

By the way, nice to see those lovely people at Goldmans got to their profit target

To 431 bps from the 414 I jotted down first thing.

Anyone would think Spain had been downgraded……….

French/German 10 year govt bond yield spread widens out to 135 bps from early 129

EUR/USD  presently at 1.3160.

Little recap on EUR/USD orders

Talk of buy orders 1.3150/60.

Now getting reports of sell stops through 1.3150 as well as 1.3140.

FRANCE DATA: March PPI +0.5% m/m; Feb: +0.7% m/m
- Manufacturing PPI +0.6% m/m
- Oil product prices +2.8% m/m
- Food and tobacco prices +0.4% m/m
- Industry import prices +1.0% m/m
See Mainwire for more details

FRANCE DATA: March sa consumer spending on goods -2.9% m/m, -2.0% y/y
– Below most analysts’ forecasts; MNI survey median forecast: -1.9% m/m
– 1Q consumer spending +0.2% q/q; 4Q +0.3% q/q
– Feb goods spending revised to +2.9% m/m from +3.0% m/m
– See MNI MainWire for details

Weaker than Reuter’s median forecast of -1.9%

French March producer prices +0.5% m/m, pretty much in line with Reuter’s median forecast of +0.6%.

From session low 1.3159 we’re at 1.3168.

Sold yesterday circa 1.3260, bought today circa 1.3160…..easy as shelling peas. 

Well it is if you’re the BIS

Aforementioned sell stops tripped through 1.3175 as European traders get down to business.

The release of weaker than expected Gfk German consumer confidence data has added further weight. May data came in at 5.6, down from revised  5.8 in April (prev 5.9), weaker than Reuter’s median forecast of 5.9.

Been as low as 1.3166, presently at 1.3170.

Buy orders seen clustered 1.3150/60, more sell stops through 1.3140.