PARIS (MNI) – In order to lighten the tax burden on business, the
new French government is considering shifting part of social payroll
charges to a broader tax on total earnings (CSG), Labor Minister Michel
Sapin confirmed Wednesday.

With a similar goal, the previous government had voted a hike of
the CSG and a 1.6-point increase in value-added tax rates for this
autumn. The new government rejects this unpopular measure on grounds
that the VAT hike would hit consumers too hard.

“The CSG is a much fairer tax than the VAT which we have just
rescinded,” Sapin said in a radio interview, explaining that it is based
on “revenues of all kinds and particularly revenues on capital.”

“If you lower social payroll taxes and replace them with the CSG,
you will not diminish purchasing power,” he added.

Introduced by the Socialists two decades ago to augment revenues
for the social security system, the CSG has been increased gradually to
over 8% and brought in nearly E90 billion last year, enough to cover
some 20% of social spending.

The labor minister neither confirmed nor denied a report in the
satirical weekly Canard Enchaine that the Finance Ministry is
considering a two-point hike in the CSG or as much as four points if the
economic situation deteriorates further. One point alone would boost
revenues by some E11 billion.

A CSG hike is “one option, but not the solution,” Sapin insisted.
“There are many options.”

While there was general agreement among participants in this week’s
“Great Social Conference” on the need to shift the financing of some
social programs away from payroll taxes to other revenue sources, some
unions like the CGT are opposed to a CSG hike.

During his campaign, President Francois Hollande had alluded to
alternative revenue sources for social spending, such as a tax on CO2
emissions. Others have suggested higher “sin taxes” on alcohol and
tobacco.

Bank of France Governor Christian Noyer spoke Tuesday of the need
to curb “as far as possible” the taxes and social security contributions
that weigh on business.

While employers have demanded urgent action to lower labor costs to
bolster competitiveness, the government intends to give unions and
employers until the middle of next year to submit propositions for new
social spending revenues, Sapin said. A national council on social
financing will be consulted this September.

The government also intends to allow employee representatives to
sit on company salary committees, a move denounced by employers. The
goal is not to allow employees to “block” hikes in pay and perks of
company executives, but rather to assure “transparency” on salary
issues, Sapin explained.

- Paris newsroom +331 4271 5540: ssandelius@marketnews.com

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

For the 1000NY/1400GMT cut

EUR/USD: 1.2200, 1.2230, 1.2245, 1.2250, 1.2285 1.2300, 1.2400, 1.2450, 1.2500,

USD/JPY: 79.25, 79.50, 79.80, 80.00

EUR/JPY: 96.25, 97.50

GBP/USD: 1.5500, 1.5540

AUD/USD: 1.0100, 1.0150, 1.0200,

EUR/AUD: 1.2000

EUR/GBP: 0.8000

USD/CHF: 0.9800

BERLIN (MNI) – A senior German lawmaker warned Wednesday that the
situation in Europe could become dangerous if it takes the German
Constitutional Court several months to decide on the constitutionality
of the European Stability Mechanism, Europe’s permanent bailout fund.

“If I look to Spain and Italy, the house is burning, so to speak,”
Norbert Barthle, the budget speaker of Chancellor Angela Merkel’s
center-right CDU/CSU bloc, told German national radio DLR.

If it would really take three to four months before the court
delivers a ruling, then countries like Spain or Italy might not even
have access to capital markets anymore, he cautioned. “Situations would
arise then which would be only hard to control,” he said.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
[TOPICS: M$X$$$,MGX$$$,M$$CR$,M$G$$$,M$I$$$,M$S$$$]

But not by a huge amount.

10 year bond yielding 6.71%.

EUR/USD meanwhile seeing fantastically active trade………….nah not really, just shittin ya

We’re at 1.2268, about 13 pips firmer from when I arrived.  Guess the lower Spanish yields will be providing some tenuous support.

Model accounts apparently  chewed up the reported sovereign offers in the 1.0220′s and buy stops were triggered through 1.0230 to a fresh weeks high of 1.0248.  The 200 day MA comes into play at 1.2069, but there are buy stops ahead of it up through 1.0250.

EUR/AUD continues to fall to fresh lows  around 1.1979, adding support to the AUD/USD which is currently around 1.0233

• VAT to rise to 21% from 18%
• Increase in environment tax
• Payment for new jobless cut to 50% of salary from 6 months
• May revise installments on company tax
• Tariff deficit to be eliminated
• Power debt to be split between consumers, companies
• New tax system to be used to eliminate tariff debt
• To scrap rebate for homebuyers in 2013
• Budget measures worth 65 bln euros over 2 years

BERLIN (MNI) – A majority of German voters backs Chancellor Angela
Merkel’s tough stance in the Eurozone debt crisis, according to a survey
released Wednesday.

Some 54% of those surveyed said Merkel’s policy line during the
crisis has been the right one. Seventy two percent say that Merkel is
well representing German interests abroad.

The representative poll by the Forsa institute — commissioned by
German magazine Stern — surveyed 1,003 respondents from July 5 to 6.

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

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

Middle Eastern, macro funds and a UK clearer all behind the rally to  1.5558 just now, and the moves getting support by talk of ongoing european corporate sales in EUR/GBP which has extended its fall to  lows of 0.7887. Talk is of a major pharmaceutical company behind the cross move  which will doubtless be visible in the hourly fixes. 

Cable  now has some reported buy stops up through 1.5560 ahead of offers sitting up at 1.5590/00 and there’s some interim support in the cross at 0.7880 before  0.7840/45

• Sees structural cuts of 2.5% in 2013, 1.9% in 2014
• Spain in second deepest recession in history
• Slump to continue next year
• 2013 contraction will be smaller, closer to zero
• Spain still has competiveness problems
• His mission is to free Spain from Zapatero’s legacy
• Spain to take additional budget measures
• Needs to cut spending, raise tax revenue
• To improve functioning of public administration
• Public admin reform seeks austerity
• To limit duties of town halls
• 3.5 bln euros savings in public admin measures
• To standardize mayor’s salries
• To cut number of local lawmakers
• To eliminate local govt’s public companies
• Regions must take decisions to meet deficit goals
• Spain must intensify deficit cuts
• Regions must act to gain credibility
• Regions to get help financing in markets
• Public workers to lose year end bonuses
• Lawmakers must alos forego year end bonus
• Reduce public companies, foundations
• Cut ministers’ budgets by 600 mln euros
• Cut subsidies to parties, unions by 20%
• To cut job placement rebates
• Cut payments for disabled people
• Change jobless benefit system
• Parliament committee to revamp pension rules

well more so than this market anyway……

 think its cheating, but I’d still like to try one of those steaks  … 

Theres progress for ya……

• Time has become critical for Spain aid
• Need to cut deficit. reform
• Summit accords must be implemented rapidly
• Progress in banking union could be faster
• Bailout conditions are ‘satisfactory’
• Govt bond purchases have been facilitated by EU deal
• Path ahead is tough, expects disagreements on EU

Bloomberg reporting.

FRANCE DATA: May SA current account deficit E4.1 bln after E4.4 bln in
April
– Trade deficit E4.1 bln after E4.4 bln
– Services surplus E1.9 bln after E1.7 bln
– Revenues surplus E2.7 bln after E3.0 bln
– Transfers deficit stable at E3.1 bln
– See MNI MainWire for details

EUR/USD:   Bids 1.2230/40, sell stops through 1.2230, barriers 1.2220 and 1.2200 with buying interest just ahead, likely sell stops through 1.2200. Offers 1.2280/00

GBP/USD:  Offers 1.5540/50 and 1.5590/00, Bids 1.5500/10, 1.5480/90 and 1.5450/60, sell stops below ahead of more bids 1.5400/10

EUR/GBP:   Bids 0.7890/00 (0.7890 barrier) likely sell stops on a break ahead of tech supp 0.7840/45. Offers 0.7930/50 and 0.7980/85

USD/JPY:   Offers 79.45/55, 79.70/80 and 80.00/10 suspected buy stops on a break.  Bids 79.00/20 (semi official, postal, Japan Life Co's and option names), sell stops just below (200 day MA- 79.00) and through 78.90.

EUR/JPY:   Offers 97.40/50, buy stops just above ahead of more offers 98.00/10. Bids 97.00/10, sell stops below and through 96.75

AUD/JPY:  Tech res 200 day MA at 81.10. Offers 81.30/40 and 81.90/00, Bids 80.50/60, sell stops through 80.45

EUR/CHF: Bids 1.2000/10(SNB), Offers 1.2025/50 buy stops through 1.2055

USD/CHF: Bids 0.9740/50 and 0.9680/90. Offers 0.9805/15

AUD/USD: Bids 1.0180/90 and 1.0150/60 (real money) sell stops through 1.0145 (21 day MA) ahead of more bids 1.0125/30 and 1.0100/10, more sell stops through 1.0100. Offers 1.0210/20 (ACB's, real money) buy stops through 1.0230, tech res 1.0265/70 (200 day MA 1.0269)

EUR/AUD:  Bids 1.1980/85 (Jul 10 all time low 1.1983) ahead of tech support 1.1960. Offers 1.2030/40 and 1.2090/00, possible buy stops above

NZD/USD: Strong bids 0.7930/35. Sell stops through 0.7920 ahead of bids 0.7900/10 (real money, exporters) likely sell stops below and through 0.7880 Tech res 0.7955-200 day MA ahead of offers 0.7980/90 and 0.7995/00 (100 day MA – 0.7996)

 USD/CAD:   Tech supp 1.0165/70 (55 day MA 1.0166) and 1.0110/15 (200 day MA 1.0113). Offers 1.0220/30 and 1.0270/80

Happy Dayz

I think we already kinda knew that…….

‘Consumer spending will play a bigger role as growth in fixed capital formation slows’

If you’d like to read the article, do a google search using the headline.

Final HICP

June: -0.2% m/m, +2.0% y/y (unrevised)
May: -0.2% m/m, +2.2% y/y

Final CPI

June: -0.1% m/m, +1.7% y/y (unrevised)
May: -0.2% m/m, +1.9% y/y
–

FRANKFURT (MNI) – German annual consumer price inflation was
confirmed at +1.7% in June, its lowest level since December 2010 thanks
to cheaper energy, the Federal Statistical Office reported on Wednesday.

Prices continued to decline on the month, easing to -0.1% to bring
overall levels to four-month lows. In EU-harmonized terms, prices fell
0.2% on the month, dampening the annual rate to 2.0% from 2.2% in April,
also in line with preliminary forecasts.

With cheaper heating oil (-4.3%) more than offsetting the modest
rise in electricity prices (+0.3%), household energy was 0.6% cheaper in
June to give an annual rise of 4.9%. Motor fuel (-2.9%) was also notably
cheaper, knocking transport costs down 0.8%, but lifting annual
inflation 0.1 percentage point to +2.1%.

Excluding household energy and motor fuel prices, core CPI rose
+0.1% on the month and +1.4% on the year.

Oil briefly topped $100 a barrel last week and earlier this week,
but eased back down after the Norwegian government stepped in to end a
two-week oil workers’ strike, thus averting a possible shutdown in
production.

While average oil prices for July remain more than 4% higher than
in June, favourable base effects and wanning demand should lead to
reduced upward energy price pressures on annual inflation rates.

Food and non-alcoholic beverage prices rose 1.0% on the month to
give an annual rise of 3.5%.

Despite the modest rise in package vacation prices (+0.1%), overall
leisure prices were unchanged on the month to give an annual rise of
1.2%.

June’s PMI polls showed manufacturing input prices falling for the
first time this year, but services input costs still boosted by energy.
Output prices as a whole were broadly unchanged, as the a rise in
service tariffs was offset by the slight dip in prices at the factory
gate.

Price pressures are likely to continue easing in the short term, an
Ifo survey showed, as selling price expectations in all major sectors
fell further last month. Ifo currently projects inflation to average
+2.0% both this year and the next after +2.3% in 2011. The
International Monetary Fund has forecast harmonized inflation at +2.2%
this year and +2.0% for 2013.

With a recent GfK poll showing households’ inflation fears waning
and buying propensity growing on the back of higher income expectations,
private consumption is likely to continue as a main growth driver of the
economy in the near term.

Noting current oil futures prices, European Central Bank President
Mario Draghi projected inflation in the Eurozone to slow further this
year and descend below 2% in 2013.

“Over the policy-relevant horizon, in an environment of modest
growth in the euro area and well-anchored long-term inflation
expectations, underlying price pressures should remain moderate,” Draghi
said, citing risks to the price outlook “broadly balanced over the
medium term”.

“The main downside risks relate to the impact of weaker than
expected growth in the euro area,” Draghi said. “Upside risks pertain to
further increases in indirect taxes, owing to the need for fiscal
consolidation, and higher than expected energy prices over the medium
term.”

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

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

Hey, what’s the hurry…….

GERMANY DATA: June HICP unrevised -0.2% m/m, +2.0% y/y, May +2.2%
– Germany June final HICP matches MNI median fcast
– Germany June CPI unrevised -0.1% m/m, +1.7% y/y, May +1.9%
– Germany June final CPI matches MNI median fcast
– See MNI MainWire for details

unchanged from preliminary reading

Final June HICP -0.2m/m, +2.0% , y/y unchanged