PARIS (MNI) – France’s new economic policy will be to bolster
growth while reducing deficits at the same time, Prime Minister
Jean-Marc Ayrault said Friday.

“On the one hand, the goal is to control our deficits and roll back
debt,” Ayrault said in a radio interview, reminding of the commitment to
bring public finances into balance by 2017.

“But on the other hand, we have to create the conditions to
relaunch growth, both in France and Europe. It’s not to add one
austerity plan to another,” he said. “Choices will thus have to be made,
and our objective is clearly to relaunch growth.”

The steep pay cut for members of the new government installed
Thursday is not a signal of overall wage moderation, as pay accords will
be debated with unions and employers, the prime minister explained.

The new government must set an example, he reiterated several
times. “If those in power want to demand sacrifices from everyone, they
must ask in all fairness.” The government’s first decree was to slash
the salary of the president and all cabinet members by 30%.

“That applies to top bosses as well,” Ayrault said, reminding of
President Francois Hollande’s pledge that the highest salaries in public
enterprises be capped at 20 times the lowest.

“By contrast, concerning [private sector] salaries, as well as for
other subjects” — work, professional training and public subsidies for
tutoring of new hires by company seniors — there will be “negotiations
with social partners that we are preparing now for the upcoming social
conference,” he said.

The prime minister declined to specify the size of the extra boost
for minimum wages this summer, since this will be decided in
consultation with unions and employers. “That will be the rule, the
method: discussion, negotiations with social partners,” he said. He
added that the case of cash-strapped mini-firms would be taken into
consideration.

The same rule applies for the details of a pension reform to allow
those who started work at the age of 18 to retire at 60 — “according to
the financial constraints,” Ayrault added.

Ahead of the parliamentary elections next month, Ayrault appealed
to voters to give the government the “largest majority” possible in
order to allow Hollande to fulfill his campaign promises. “If not, the
presidential election will have been for naught,” he said.

–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com

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

We’re back around 1.2685 after the rally stalled at 1.2703.

Comments from EU trade commissioner De Gucht  that the ECB  and EU are drawing up some emergency plans in the event of a Greek exit from the Euro aren’t helping either.

Offers remain in the 1.2700/10 region with bids down towards 1.2650 and sell stops starting through 1.2640

 Centred near Ibaraki and with a depth of 50km, Buildings reportedly shaken in Tokyo ..according to NHK

No Tsunami warning issued

• Underlying UK economy is weaker than he thought
• May have been premature in his  estimates that £125 mio of QE was enough, has reduced his expectations of the latest QE effect
• Core CPI was stickier than he forecast, but remains confident that inflation will fall 

ITALY DATA: March industrial orders rose 3.5% m/m in
seasonally-adjusted terms on increased domestic and foreign orders,
after two consecutive m/m declines. On the year, unadjusted industrial
orders fell 14.3%, down from -13.2% y/y in February and the steepest y/y
fall since August 2009 (-16.5% y/y). –March seas. adjusted m/m domestic
orders +2.6%; foreign orders +5.1% –March seasonally-adjusted turnover:
flat m/m, workday adj. -3.1% y/y

Better on the month but the  y/y fall was the sharpest since August 2009. Sales were flat in March after a 2.3% rise in Feb

Hearing a lot of reports of Asian sovereign names diversifying reserves following o/n intervention in  the likes of USD/KRW and USD/INR.

Korea in particular has been mentioned recently , but the sales appear to be mopped up by ongoing demand from real money large asset reallocation.  European equities are now reversing earlier sharp falls which is also helping

EUR/USD steadying in the low 1.2670′s

PARIS (MNI) – Europe must continue to aid Greece financially in
order for it to remain in the Eurozone, French Prime Minister Jean-Marc
Ayrault said Friday.

To overcome the “brutality of the austerity plans” that leave no
perspective for economic recovery, “we must aid Greece, we must give
them a signal,” the freshly appointed government head said in a radio
interview. He warned of the risk that the Greeks could lose all hope —
as seen by the “catastrophic” results of the recent legislative
election.

“Thus, along with the need to bring accounts into order, we must
help this country back on its feet,” he said, citing unused EU
structural funds as a possible source of financing.

“The goal is clearly that Greece remain in the Eurozone,” Ayrault
insisted. European leaders waited “too long before helping Greece,”
allowing the situation to deteriorate, he charged.

Ayrault noted that the first talks between French President
Francois Hollande and German Chancellor Angela Merkel had dealt with
“specific aid for Greece” to bolster its economy.

Besides the “internal causes” of financial tensions in certain
countries, the “general problem of the Eurozone, with such weak growth
and market speculation,” must be addressed, he said.

France will continue to push for the introduction of eurobonds,
Ayrault confirmed, observing that Hollande’s plea for joint EU financing
“did not startle the chancellor” at their press conference in Berlin on
Wednesday.

The dialogue with Germany must be “completely frank” and take place
with “mutual respect” in order to overcome the current “imbalance”, he
said. “Then we will try to converge, because we must exit this crisis.”

Much work remains to be done before the EU summit at the end of
June, he conceded.

–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com

[TOPICS: MT$$$$,M$F$$$,M$G$$$,M$X$$$,MGX$$$,M$Y$$$]

Fair bit of 2 way business going through at the moment  with some real money names now appearing on the buying side along with some reported Middle Eastern interest.

Corporates are apparantly still on the offer currently stalling the rally around 1.2680, but better offers lie in wait up around 1.2700/10.

We’re sitting around 1.2670

EUR/USD: Sell stops through 1.2640, ahead of barriers 1.2625, 1.2615 and 1.2600 (with sell stops just below each). Offers 1.2700/10 and 1.2750/60

GBP/USD:  Offers 1.5790/00, and 1.5820/30. Bids 1.5740/45, 1.5700/10 (likely sell stops just below)

EUR/GBP:  Bids 0.8020/25 and 0.7995/00. Offers 0.8050/55

AUD/USD: Bids 0.9790/00, barriers 0.9750 and 0.9700. Offers 0.9850/60

EUR/JPY:  Bids 100.00/10, large sell stops just below. Offers 100.50/60 and 100.80.90

USD/JPY:  Bids 79.00/10, sell stops just below and through 78.80 ahead of tech support 78.50/55 (78.51-200 day MA) Offers 79.45/55

EUR/CHF:  Bids 1.2000/10 offers 1.2015/25

USD/CHF:  Offers 0.9495/00, tech res 0.9545/50. Bids 0.9330/35 and tech supp 0.9315/20

PARIS (MNI) – Germany wants Greece to remain in the Eurozone, but
Athens must deliver the deficit cutting and economic reforms it has
promised in exchange for financial aid, German Finance Minister Wolfgang
Schaeuble said Friday.

“We want Greece to stay but to honor its obligations,” Schaeuble
said in an interview on French radio, speaking through a translator.

Schaeuble said Greece’s reform program and the challenges the
country is facing had been misrepresented during the recent campaign
there and in the aftermath of the inconclusive voting, which has led to
new elections being scheduled for June 17.

“Greek politicians must not make false promises,” he said,
apparently alluding to those — including lefist Syriza leader Alexis
Tsipras — who argue that Greece can abrogate the bailout program and
still remain in the Eurozone.

Schaeuble argued that it was misleading to refer to the Greek plan
as austerity. “There is no austerity plan for Greece. The Greek plan is
one to regain competitiveness,” he said.

The minister sought to downplay the notion that there could be
conflict between France’s new Socialist President Francois Hollande, who
strongly emphasizes the need for growth, and German Chancellor Angela
Merkel, who champions strict adherence to deficit reduction.

“It is clear, they both said it, that Mr. Hollande and Madame
Merkel will work together,” Schaeuble said. He emphasized the “points in
common” between France and Germany throughout European history and said
“we will have that in mind as we construct the future.”

Hollande ran on a pro-growth platform and argued that the EU’s
recently agreed fiscal compact, which tightens common budget controls,
must contain a section committed to supporting economic growth.

Schaeuble, asked whether the pact could be renegotiated to
accommodate Hollande, noted that there always elections in European
countries and previous agreements cannot be overturned or altered
because of election results.

An economic advisor to Hollande said recently that while the new
French president wants to add language to the compact in favor of
growth-promoting measures, he has no intention of revisiting any of the
fiscal governance provisions it already contains.

Schaeuble sought to minimize any potential differences between
himself and France’s new Finance Minister Pierre Moscovici, whom he said
he has not yet met. He noted he had worked well in the past with a
previous Socialist minister from France and that they become good
friends.

Because of the importance of the relationship between France and
Germany, “French and German ministers must cooperate strongly,” he said.

With regard to his own approach to economic policy in Germany,
Schaeuble said, “I have always chosen to reduce the deficit not while
reducing growth but while supporting it.”

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

[TOPICS: M$X$$$,M$G$$$,M$F$$$,MGX$$$,M$$CR$]

Sell stops were tripped to a fresh 4 month low of 1.2642, ahead of the  next barrier at 1.2625  with  stops set on a break there.

Below there are further barriers at 1.2615 and 1.2600..

EUR’s around 1.2650

• Sees markets calming down in 12-24 months !
• Greece aims to regain its competitiveness
• Wants to see Greece honour its commitments and remain in the Eurozone
• Sees France  respecting treaty accords
• Expects and sees Merkel and Hollande cooperating

Comments made on French radio

– See Separate Tables For Details Of Individual Forecasts

TOKYO (MNI) – The following are the median forecasts for Japanese
economic data due in the coming week provided by economists surveyed by
MNI.

April trade will show a deficit for the second straight month on a
continued high increase in oil and gas imports used to make up for the
loss of nuclear power generation. Imports are forecast to have risen
10.9% y/y in April after +10.6% in March.

The year-on-year export growth will surge to +12.7% from +5.9% in
March in a sharp rebound from -12.4% in April 2011, when carmakers and
electronics firms suffered from the supply chain breakdowns caused by
the earthquake disaster.

Meanwhile, national core CPI (excluding perishables) will show
easing deflationary pressures in April, marking the third straight small
year-on-year rise, thanks to high gasoline prices and utility costs
while Tokyo CPI will continue to show a decline.

Wednesday, May 23, 0850 JST (2350 GMT Tuesday): The Ministry of
Finance releases the April trade balance. Forecast: a deficit of Y472.6
billion vs. a deficit of Y477.74 billion in April 2011 and a deficit of
Y84.52 billion in March 2012.

Friday, May 25, 0830 JST (2330 GMT Thursday): The Ministry of
Internal Affairs and Communications releases April CPI. Forecast: core
national CPI +0.1% y/y in April, the third consecutive rise after +0.2%
in March. May core Tokyo CPI -0.5% y/y vs. -0.5% in April.

skodama@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4838 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]

Quite a panic sell off earlier following comments from ANZ’s Mike Smith in an interview with SKY saying that wholesale funding markets had froze.  This triggered a wave of concern that antipodean banks may face higher funding costs in a market that  has already had its nerves shot to pieces.

A few offers now  lying up in the 0.9820/30 area are stalling any rallies and the tone remains very heavy for the time being

AUD’s at 0.9805

– Japan Apr Department Store Sales +1.3% Y/Y; Mar +14.1%
– Department Store Sales Post 2nd Straight Y/Y rise

TOKYO (MNI) – Department store sales in Japan rose 1.3% on year to
Y480 billion in April, marking the second straight rise after a 14.1%
surge in March, free of year-ago’s depressed consumer confidence and
damage to stores caused by the earthquake disaster, Japan Department
Stores Association data showed Friday.

Higher temperatures in the second half of the month boosted demand
for spring clothing and sales of casual business clothing for the summer
also led overall sales as peak-time power supply shortages are feared,
the association said

Sales of jewelry and other luxury goods remained firm, up 7.7% on
year, while visitors from overseas are returning to Japan after the
Fukushima nuclear meltdown scared them away last year.

The association compiles data from 86 companies running 249
department stores that have been open for at least a year prior to the
survey being conducted. The data are adjusted to facilitate comparisons
on a same-store basis.

In Tokyo, combined sales at 26 department stores increased 6.7% y/y
in April, showing the second consecutive monthly gain after +26.7% in
March.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4835 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]

GERMANY DATA: April PPI +0.2% m/m, +2.4% y/y, lowest since June 2010
- March PPI +3.3% y/y; February +3.2% y/y
- April PPI below MNI median m/m forecast (+0.3%)
- April PPI below MNI median y/y forecast (+2.7%)
- April PPI ex-energy +0.2% m/m, +1.5% y/y; March +1.6% y/y
- April PPI ex-petroleum products +0.3% m/m, +2.1% y/y
- April PPI energy +0.1% m/m, +4.5% y/y; March +1.3%/+7.1%
- April PPI capital goods +0.1% m/m, +1.2% y/y; March +1.3% y/y
- April PPI cons goods +0.1% m/m, +3.1% y/y; March +3.5% y/y
- April PPI basic goods +0.3% m/m, +0.6% y/y; March +0.9% y/y
- See MNI MainWire for details

Worse than expected and the lowest y/y since June 2010. (March PPI  was +0.6%m/m, +3.3%y/y)

A sea of red in Asia with the Nikkei, Hang Seng and S&P/ASX 200 all down around 3 %

FTSE looks likely to open around 65 points lower, DAX down around 70 and the CAC40 down around 30…

There are sell stops down through 100.00 and talk of a possible barrier at the level.  Offers lie up at 100.80/00

Low today has been 100.24 and we’re presently sitting around 100.38