• By using bank restructuring fund and Treasury liquidity
• Will use strict regional budgetary controls to centralise and issue debt  for various regions

I’m gonna go get myself a job renting deckchairs on the beach.

EUR/USD has drifted back to 1.2550 having reached the dizzy heights of 1.2574. 

Talk AAA Dutch bank notable seller around the highs.  Apparently rebalancing out of recent EUR/CHF purchases said to have been done on behalf of the SNB.

Therer  are some pretty large offers sitting ahead of the level which also holds a large option strike today.

AUD’s back down around 0.9865 after running out of steam at 0.9898. Buy stops are reportedly set on a break of 0.9900 ahead of some tech resistance up around 0.9935 (May 22 high)

CPI – May HICP – May
%mom %yoy %mom %yoy

Median Forecast -0.1 2.1 -0.2 2.2
High forecast 0.9 2.3 0.2 2.5
Low forecast -0.2 1.9 -0.3 2.1
Previous period 0.2 2.1 0.1 2.2
-
Number of responses 12 12 7 8
-
4Cast 0.0 2.1 0.0 2.3
Barclays Cap. -0.2 1.9 -0.2 2.1
Berenberg Bank 0.9 n/a n/a n/a
BNP Paribas -0.1 1.9 -0.1 2.2
BoA-ML n/a n/a n/a 2.2
Capital Economics n/a n/a -0.2 2.1
Citi -0.2 1.9 -0.2 2.2
Commerzbank -0.2 1.9 n/a n/a
DZ Bank 0.0 2.3 n/a n/a
Lloyds Bank n/a n/a 0.0 2.1
LBBW n/a 2.1 n/a n/a
Morgan Stanley -0.1 2.0 n/a n/a
Soc. Generale -0.2 1.9 -0.3 2.1
Standard Chartered 0.0 2.1 n/a n/a
UBS 0.2 2.3 0.2 2.5
West LB 0.0 2.1 n/a n/a

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

The survey was conducted on Friday, May 25.

[TOPICS: MTABLE,M$GDS$,M$G$$$,M$XDS$,M$X$$$]

Brandenburg CPI

May: -0.2% m/m, +2.0% y/y
April: +0.2% m/m, +2.1% y/y
—
Pan-German CPI

MNI median forecast: -0.1% m/m, +2.1% y/y
MNI forecast range: -0.2% to +0.9% m/m

April: +0.2% m/m, +2.1% y/y
—

BERLIN (MNI)- Consumer prices in the eastern German state of
Brandenburg fell 0.2% in May, dampening the annual inflation rate to
+2.0% from +2.1%, the state statistics office said Tuesday.

The monthly result is below the median forecast of -0.1% for
pan-German CPI in a MNI survey of analysts. The states of Saxony and
Hesse also reported a 0.2% monthly CPI decline in May.

Downward pressure on monthly inflation came from motor fuel, which
fell 2.4%, and heating oil, which declined 2.2%. Electricity and gas
remained unchanged. Food prices fell 0.3%, with seasonal produce up
0.7%.

Annual price developments were again driven by energy price
increases, with heating oil up 9.5%, gas up 8.0%, motor fuel up 2.6% and
electricity up 0.7%. Food prices were 2.6% higher than a year ago, while
seasonal produce was down 1.5%.

CPI excluding seasonal foods was down 0.2% on the month and up 2.1%
on the year. CPI ex-heating oil and motor fuel was down 0.1% on the
month and up 1.8% on the year.

The Bundesbank reasoned last week that as the Eurozone undergoes a
macroeconomic adjustment process, Germany should see only “marginally
higher-than-average rates of price increase” and those only “at times.”

Currently, price increases are “being decisively influenced by
external factors”, the central bank said, citing the sharp rise in crude
oil prices and the considerably weaker euro since last summer.

Markedly higher pay hikes under collective bargaining deals look
likely this year as the economy will continue to grow albeit possibly at
a slower pace than in the first quarter, the Bundesbank said.

So far, pay hikes in the country’s major sectors have been above 4%
this year, yet the duration of the contracts goes beyond 12 months.

The Finance Ministry said last week that the wage deals in Germany
“are currently no inflation risk.”

The latest PMI polls, though, show price pressures in Germany
growing, with input and output price inflation rising in May.

Still, upward price pressures on annual inflation rates should wane
due to favourable base effects and the current downward trend in Brent
crude prices.

Import price inflation eased to two-year lows in April, as cheaper
energy brought the first monthly decline since October, the Federal
Statistical Office reported earlier on Tuesday.

The latest forecasts of the Organisation for Economic Cooperation
and Development point to German HICP rising 2.3% on average this year
and slowing to +2.0% in 2013.

For detailed information see data table on MNI MainWire.

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

[TOPICS: M$G$$$,MAGDS$,M$X$$$,M$XDS$,MT$$$$]

Hesse CPI

May: -0.2% m/m, +1.9% y/y
April: +0.2% m/m, +1.9% y/y
—
Pan-German CPI

MNI median forecast: -0.1% m/m, +2.1% y/y
MNI forecast range: -0.2% to +0.9% m/m

April: +0.2% m/m, +2.1% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of Hesse
fell 0.2% in May, leaving the annual inflation rate unchanged from April
at +1.9%, the state statistics office said Tuesday.

The monthly result is below the median forecast of -0.1% for
pan-German CPI in a MNI survey of analysts. The eastern state of Saxony
also reported a 0.2% monthly CPI decline in May.

Downward pressure on monthly inflation came from motor fuel, which
fell 3.8%, and heating oil, which declined 3.2%. Electricity remained
unchanged, while gas was up 0.1%. Food prices were up 0.1%, with
seasonal produce up 1.0%.

Annual price developments were again driven by energy price
increases, with heating oil up 7.9%, gas up 4.6%, motor fuel up 3.1% and
electricity up 2.7%. Food prices were 2.8% higher than a year ago, while
seasonal produce was down 0.2%.

CPI excluding energy and seasonal goods and services was down 0.2%
on the month and up 1.9% on the year.

The Bundesbank reasoned last week that as the Eurozone undergoes a
macroeconomic adjustment process, Germany should see only “marginally
higher-than-average rates of price increase” and those only “at times.”

Currently, price increases are “being decisively influenced by
external factors”, the central bank said, citing the sharp rise in crude
oil prices and the considerably weaker euro since last summer.

On the other hand, markedly higher pay hikes under collective
bargaining deals look likely this year as the economy will continue to
grow albeit possibly at a slower pace than in the first quarter, the
Bundesbank said.

So far, pay hikes in the country’s major sectors have been above 4%
this year, yet the duration of the contracts goes beyond 12 months.

The Finance Ministry said last week that the wage deals in Germany
“are currently no inflation risk.”

The latest PMI polls, though, show price pressures in Germany
growing, with input and output price inflation rising in May.

Still, upward price pressures on annual inflation rates should wane
due to favourable base effects and the current downward trend in Brent
crude prices.

Import price inflation eased to two-year lows in April, as cheaper
energy brought the first monthly decline since October, the Federal
Statistical Office reported earlier on Tuesday.

The latest forecasts of the Organisation for Economic Cooperation
and Development point to German HICP rising 2.3% on average this year
and slowing to +2.0% in 2013.

For detailed information see data table on MNI MainWire.

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

[TOPICS: M$G$$$,MAGDS$,M$X$$$,M$XDS$,MT$$$$]

GERMANY DATA: Consumer prices in the state of Brandenburg fell 0.2% on
average on the month in May, lowering the annual rate to +2.0%, the
state’s statistics office reported on Tuesday.
– Brandenburg May CPI m/m below MNI median for Germany (-0.1%)
– See MNI MainWire for details

GERMANY DATA: Consumer prices in the state of Hesse fell 0.2% on average
on the month in May, leaving the annual rate unchanged at +1.9%, the
state’s statistics office reported on Tuesday.
– Hesse May CPI m/m below MNI median for Germany (-0.1%)
– See MNI MainWire for details

Talk that an Asian Central Bank was selling into the recent rally to  1.5716, but GBP/USD’s holding around  1.5705 as EUR/GBP struggles to  make any headway above 0.8005 ,and market tends to side with sterling over  the euro as Spanish /Greek worries continue.

Cable offers now seen up ahead of 1.5720 with  further tech resistance towards 1.5735/45

We did a EUR/USD poll back on 24/5 and we had an approx 2-1 reponse in favour of 1.2650 before 1.2450.

We’ve had a few rally attempts since then which have floundered around the well-documented 1.2625 resistance.

So is sentiment still so bullish? Or maybe it’s even more bullish……

What’ll we see first, 1.2450 or 1.2650?

Reasoning/s as always very welcome, but not obligatory.

Lance wants a USD/JPY reader poll, bless his little cotton socks.

So a USD/JPY poll he shall have.

What’ll we see tested first, 100 dma at 80.00 or 200 dma at 78.58?

Reasoning/s as always cool, but not obligatory.

Guess if you go for 80.00 you’ve got a bit of a head start

–Says UK Monetary Policy At Moment Is ‘Very Stimulatory’
–Need To Get Inflation Down Further And Back To 2% Target
–Comments To BBC Scotland In Line With Dale’s Hawkish Record

LONDON (MNI) – It will take time for the effect of the second round
quantitative easing which was launched in October 2011 to feed through
into the economy, Bank of England Chief Economist Spencer Dale said this
morning.

In an interview with ‘Good Morning Scotland’ on BBC Radio Scotland,
Dale said that monetary policy remained very stimulatory –

“Monetary policy at the moment is very stimulatory because we have
Bank Rate at 0.5%, we have undertaken a large amount of quantitative
easing and that will continue to flow through the economy”.

Dale said that decisions on QE going forward would be determined by
the balance of the two risks on the growth and inflation risks –

“We expect to see a gradual recovery in growth this year and, in
terms of inflation – the data as you know has dropped from 5% to 3% –
and we need to get it down further and back down to our target of 2%.
And, in the case of quantitative easing, as we go forward, it will be
affected by balancing those two risks”.

Dale said it made “perfect sense” for the UK to “put in place
various plans and contingencies” against a possible deterioration of the
euro zone situation and that “we try and insulate as much as possible
our own economy”.

The official refuted ideas that QE might never have any impact
on the economy.

“Had we not undertaken QE our economy would be in a far far worse
state than it is now,” he said.

Dale continued:

“I think there are clear signs that the first round of quantitative
easing did have a very material effect on the economy but the second
round only really completed a couple of months ago and it will take time
to feed through”.

The comments are in line with ideas that Dale is on the more
hawkish wing of the Bank’s Monetary Policy Committee and is not one of
those who regard themselves as ‘finely balanced’ on whether more asset
purchases are required.

–London newsroom: 4420 7862 7492; email: dthomas@marketnews.com

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

LONDON (MNI) – It will take time for the effect of the second round
quantitative easing – launched in October 2011 – to feed through into
the economy, Bank of England Chief Economist Spencer Dale said this
morning.

In an interview with ‘Good Morning Scotland’ on BBC Radio Scotland,
Dale said that monetary policy remained very stimulatory –

“Monetary policy at the moment is very stimulatory because we have
Bank Rate at 0.5%, we have undertaken a large amount of quantitative
easing and that will continue to flow through the economy”.

Dale said that decisions on QE going forward would be determined by
the balance of the two risks on the growth and inflation risks –

“We expect to see a gradual recovery in growth this year and, in
terms of inflation – the data as you know has dropped from 5% to 3% –
and we need to get it down further and back down to our target of 2%.
And, in the case of quantitative easing, as we go forward, it will be
affected by balancing those two risks”.

Dale said it made “perfect sense” for the UK to “put in place
various plans and contingencies” against a possible deterioration of the
euro zone situation and that “we try and insulate as much as possible
our own economy”.

The official refuted ideas that QE might never have any impact
on the economy.

“Had we not undertaken QE our economy would be in a far, far worse
state than it is now,” he said.

Dale continued:

“I think there are clear signs that the first round of quantitative
easing did have a very material effect on the economy but the second
round only really completed a couple of months ago and it will take time
to feed through”.

–London newsroom: 4420 7862 7492; email: dthomas@marketnews.com

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

EUR/USD sits at 1.2555.

Sell orders seen clustered up around 1.2570, buy stops through 1.2575.

 32 miles NE of Parma  according  to the USGS

In early trade from 511 first thing. 

Lending single currency some support, EUR/USD up at 1.2557 from early 1.2535.

When all said and done though, we’re firmly ensconsed in consolidative range trade. Parameters? 1.2480-1.2625 will do.

Middle Eastern sovereign buying noted in this latest leg higher.

Much worse than expected  median of -6.3% and after -3.7% in March. The largest recorded fall since 2003

April: -0.5% m/m, +2.3% y/y

MNI survey median: -0.1% m/m, +2.6% y/y

March: +0.7% m/m, +3.1% y/y
February: +1.0% m/m, +3.5% y/y
–

FRANKFURT (MNI) – Import price inflation in Germany eased to
two-year lows in April, as cheaper energy brought the first monthly
decline since October, the Federal Statistical Office reported on
Tuesday.

Import prices were down 0.5% between March and April, undershooting
most forecasts to bring the annual rise to 2.3%, the weakest since
January 2010.

Excluding imported oil (-4.0% m/m, +6.8% y/y), and petroleum
products (-2.0%/+9.1%), core import prices were unchanged in monthly
terms and 1.4% higher on the year. Excluding energy, the core rate came
to -0.1% m/m and +0.7% y/y.

Upward price pressures stemming from energy on annual imported
inflation rates should continue to wane due to favourable base effects
and the current downward trend in Brent crude prices.

Expecting that further declines in oil prices may be premature,
however, the International Energy Agency said this month that slightly
higher-than-expected demand and lower non-OPEC supply had led to a
“marginally tighter picture” on the oil market. While OPEC supply has
thus far filled the gap, “there is no room for complacency,” the IEA
warned.

“The path of market fundamentals for the rest of the year remains
highly uncertain and geo-political risks will likely continue to keep
prices high,” the agency said.

Intermediate goods imports, often the first to reflect changing
trends in commodity prices, dipped 0.1% in April to give an annual
decline of 1.0%.

Capital goods imports were 0.2% more expensive than in March and
1.8% higher compared to April 2011. Imported consumer goods prices were
up 0.3% on the month and 3.1% higher on the year,

May consumer price data from the German state of Saxony showed
cheaper energy dampening the monthly change, while the annual rise
slipped below 2% for the first time since early 2011. National estimates
are scheduled for release later today. The median forecast in an MNI
survey of analysts is for a 0.1% decline in CPI on the month and a 2.1%
rise on the year.

Export prices in April were up 0.3% on the month, lowering the
annual rise to 2.0%, its slowest since the fall of 2010.

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

[TOPICS: MTABLE,M$G$$$,MAGDS$,M$XDS$,M$X$$$]

To issue new 6-month BOT maturing November 30th.

Target amount 8.5 bln euros

Results due around 09:10 GMT.

–Eurobonds Would Create “False Incentives” For Peripheral EMU Members

FRANKFURT (MNI) – Former European Central Bank Executive Board
member Juergen Stark on Tuesday warned that the introduction of
Eurobonds would cost Germany its top credit rating and create “false
incentives” for highly-indebted countries in the Eurozone to relax the
pace of their reforms.

In an editorial published by Germany’s business daily Handelsblatt,
Stark said Eurobonds would lead to an “enormous transfer of wealth” to
peripheral countries, weaken the incentive for necessary structural
reforms and potentially cost Germany tens of billions of euros in higher
debt financing costs.

“Germany would lose its top (credit) rating,” Stark warned, noting
that “Eurobonds are attractive to all countries that do not possess a
AAA rating.”

“Eurobonds solve none of the structural problems in highly-indebted
countries,” he wrote. “On the contrary, Eurobonds create false
incentives. Reform readiness would immediately weaken and public debts
would rise further.”

Stark noted that France, which has recently driven the debate for
Eurobonds, must also prepare for higher financing costs as it comes
increasingly onto the radar of markets. He questioned whether France was
really willing to take greater responsibility for the debts of other
Eurozone nations, or whether it was supporting Eurobonds in order to
finance its own spending on the backs of other countries.

Eurobonds, Stark added, would “mean that other member countries
would take on unlimited liabilities, without having influence over the
spending behavior of the country that profits.”

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

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