Demonstrably weaker than Reuter’s median forecasts -0.1%, -1.1% respectively

• Europe will end up stronger that it is today, with stronger institutions

Give that man a coconut……

• Spain approaching moment of decision

• Will not speculate on Grece’s future financial policy but German banks prepared for all possible scenarios
• Bundesbank closely following developments in Spain, Portugal; situation there not comparable to Greece
• German banking system robust but cancompletely avoid effects of financial environment
• ECB 3 year tenders bought time that governments and banks must use to solve problems, regain market trust
• On fiscal union, BAFIN chief says perhaps best to wait for current measures to show results before launching new ideas (ummmm, not so sure on that one)

Dow Jones headline.

Not so sure the sell-off is all that curious, but the extent and speed of it this morning is certainly somewhat surprising.

It has the market participants I’ve spoken to scratching their heads somewhat, and to be honest I can’t see an obvious strong  trigger for the accelerated euro losses.

Best I can come up with is the comments from Spain’s Treasury Minister, that at current borrowing costs market door not opened to Spain and the reiteration that it’s technically impossible to rescue Spain.

The move is obviously being exacerbated by extremely thin market conditions with UK out on bank holiday.

Touch better than flash read of 46.5.

Composite PMI 46.0, also fractionally better than flash read of 45.9.  But lowest since June 2009.

Lower than flash read of 52.2.

Fractionally lower than flash read of 45.2.  Lowest in seven months.

Up from 42.3 in April and better than Reuter’s median forecast of 41.8.

BERLIN (MNI) – German Finance Minister Wolfgang Schaeuble in a
newspaper interview published Tuesday reaffirmed the government’s stance
that joint eurobonds in the Eurozone are conceivable only once fiscal
union has been achieved.

Schaeuble told the German business daily Handelsblatt that “a real
fiscal union” is necessary before the idea of a joint debt management in
the currency zone can be approached, stressing that such a fiscal union
is a medium-term project.

On Monday, government spokesman Steffen Seibert had reminded that
Germany strongly opposes eurobonds as a tool to combat the crisis.
“Eurobonds are under no circumstances a solution now,” he said. Germany
sees Eurobonds as a possibility only in the distant future when a real
fiscal union has come about in Europe, he said.

Schaeuble said in the interview that a banking union could be
gradually achieved in the European Union, as proposed by European
Commission president Jose Manuel Barroso.

On Monday, Chancellor Angela Merkel and Barroso said that along
with short-term measures to counter the crisis there is need of deeper
European integration over the medium term.

The Commission president explained that this may include a banking
union: “Some elements of this banking union will be more integrated
financial supervision and also more integrated deposit guarantees.”

Merkel said that systemically relevant banks in Europe need to come
under a “specific European supervision,” adding, though, that “these are
medium-term goals.”

In other remarks, Schaeuble told Handelsblatt that Germany supports
the introduction of a financial market tax similar to the stamp duties
in the U.K. and France in as many EU member states as possible. This
taxation regime should also cover derivatives, he explained.

Asked by the newspaper if an exit of Greece from the Eurozone is a
realistic scenario, Schaeuble replied, “Greece has to decide on its
own.”

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

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

Slightly better than Reuter’s median forecast of 41.6, but down from 42.1 in April.

Eleventh month below 50 mark.

• Banking union should be agreed by June 28-29 EU summit
• Financial needs to recapitalise Spanish banks not a big sum
• EU must move faster to support Spain
• Doesn’t expect to increase value added tax rate
• Neither France nor Germany has asked Spain to seek an international bailout
• It’s technically impossible to rescue Spain

Congratulations to those who went with 1.2500 in yesterday’s poll.

We sit at 1.2505.

What’ll we see first now,  1.2400 or 1.2600?

Reasoning/s always very welcome, but not obligatory.

Zerohedge.

EUR/USD sits serenely at 1.2525, effectively unchanged in past hour and a half.

London out again,  so a sharp move this morning would be a little surprising barring a surprise tape bomb.  We’ll see.

Talk of buy orders clustered down around 1.2500, sell orders up at 1.2550/70.  Also talk of buy stops gathered through 1.2550 just to spice things up a little.

Financial bookies see DAX opening as much as +0.4% firmer,  CAC 40 as much as +0.5% firmer.

Love him or loathe him, latest from AEP at The Telegraph.

Wayne Swan told reporters “Unlike most other countries, there is great, great scope for the deployment of monetary policy in our economy”

The official also took the opportunity to say he’s very disappointed that EU authorities have been so slow to act.

Seems everyman and his dog is trying to ratchet up the pressure on EU authorities to get their act together.

Got any ideas you’d like to share with your fellow readers, then here’s where to stick ‘em.

The general consensus amongst AUD dealers would seem to be that a 25bps rate cut is very highly likely and this is in effect already priced in. If this eventuates, then the AUD/USD would probably stay relatively unchanged, perhaps gapping around in a 40 pip range as short-term positions exit the market.

http://www.forexlive.com/blog/2012/06/04/rba-decision-25bps-cut-priced-into-the-market/

I’m bound to get it right occasionally. See you tomorrow.