Improvement from the -6.5% seen in Q1.

In very thin trading  were back in the  window of bids at 78.00/20 after a steady grind lower this morning. The bids are reputedly of semi-official flavour along with buying interest from importers down at 78.00. Large sell stops loom  down through 77.90 ahead of the next tranche of bids infront of barriers supposedly placed at 77.75 and 77.50.

Offers remain in place from 78.30 up to 78.50 and again from 78.75 up to 79.00 but there are buy stops mixed in up through 78.75 and on a break of 79.00

USD’s sitting  at day’s lows of 78.16

– Fix Typo

LONDON (MNI) – Bank of England Governor Mervyn King warned over the
weekend that the clear success of the Olympic Games cannot alter the
underlying economic difficulties faced by the UK.

In an article for Mail on Sunday, King said the economy was only
‘slowly healing’ and that there was ‘no obvious end in sight’ for the
eurozone crisis:

“The conditions are in place for a recovery and the Bank of England
is, and will carry on, doing all we can to help bring it about.
Interest rates are low. Inflation has fallen. We have injected money to
stimulate the economy. The squeeze on real take-home pay is coming to an
end,” King writes.

But any recovery would take time, King added.

The international situation was certainly exacerbating the UK’s
problems:

“If the rest of the world were growing normally, the rebalancing
and recovery of our economy would be much easier. But it isn’t. Even
the rapidly expanding emerging market economies are slowing, and the
problems of the euro area continue with no obvious end in sight”.

–LOndon Bureau; Tel: +442078627492; email: dthomas@marketnews.com

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

Head of the government Labour office tells Tages Anzeiger.

Well I never, who would have thunk it?

LONDON (MNI) – Bank of England Governor Mervyn King warned over the
weekend that the clear success of the Olympic Games cannot alter the
underlying economic difficulties faced by the UK.

In an article for Mail on Sunday, King said the economy was only
‘slowly healing’ and that there was ‘no obvious end in sight’ for the
euro zone crisis:

“The conditions are in place for a recovery and the Bank of England
is, and will carry on, doing all we can to help bring it about.
Interest rates are low. Inflation has fallen. We have injected money to
stimulate the economy. The squeeze on real take-home pay is coming to an
end,” King writes.

But any recovery would take time, King added.

The international situation was certainly exacerbating the UK’s
problems:

“If the rest of the world were growing normally, the rebalancing
and recovery of our economy would be much easier. But it isn’t. Even
the rapidly expanding emerging market economies are slowing, and the
problems of the euro area continue with no obvious end in sight”.

–LOndon Bureau; Tel: +442078627492; email: dthomas@marketnews.com

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

‘AIG, the insurance giant, is pulling some of its cash out of the eurozone in the latest sign of corporate flight from the debt stricken continent’

Call it pure conjecture on my part , but i did see a bear suit hanging up in Gerry’s House last time i went up to darkest Suffolk , and coincidentally he was off last week….

Monday mornings in Europe are normally cack.

This morning has so far proven no exception to the rule.

We sit at 1.2281, a whole 12 pips easier from the 1.2293 which greeted me.

Talk has buy orders clustered from 1.2270 down to 1.2240, sell stops below there.

Topside, sell orders clustered 1.2300/20, buy stops through both 1.2320 and 1.2330 apparently.

Angela Merkel’s back from her hols.

Maybe she’ll come out and say something controversial. Well we can hope, can’t we?

What’s being touted out there is :-

USD/CAD: 0.9900

USD/JPY: 77.75 and 77.50

AUD/USD : 1.0650

Strong bids in the 1.0540/45 are keeping the base intact on the AUD this morning along with the inability for EUR/AUD to bounce  significantly after Friday’s collapse from 1.1690/95.

Initial cross resistance is now seen around 1.1680/85 (1.1681 -10 day MA)  ahead of trendline resistance around 1.1730/35. Bids remain down in the 1.1600/10 at the all time lows seen at the beginning of August.

AUD/USD topside resistance/offers come in from 1.0570 and run up to 1.0600 with offers  from US hedge funds and some  touted RBA commercial interest and includes the Friday NY high of 1.0578.

On the downside the above mentioned bids at 1.0540/45 are rumoured to include sovereign bids related to AAA rated AUD assets and run down to 1.0500, but very large sell stops are supposedly placed on a break down  1.0495

While I was away we breached the lower parameter (just) of the last EUR/USD 1.2250-1.2450 poll.

So, time for a new one.

We sit at 1.2285.

So what’ll we hit first, 1.2185 or 1.2385?

Reasoning/s welcome, but not obligatory.

FRANCE DATA: June current account deficit widened to E4.9 bln from
E4.0 bln in May (revised from -E4.1 bln)
- Bigger merchandise goods shortfall (-E6.3 bln vs -E5.7 bln) and
- Smaller services surplus (+E1.5 bln vs +E1.9 bln).
- Revenues surplus stable (+E2.9 bln
- Transfers deficit also stable (-E3.0 bln)

Oh dear

FRANKFURT (MNI) – Germany will block further aid to Greece should
Athens fail to meet all conditions required by the bailout agreement,
the deputy head of Chancellor Angela Merkel’s conservative parliamentary
block, Michael Fuchs, told German daily Handelsblatt.

“Even if the glass is half-full, that is not enough for a new aid
package,” he said in an interview published Monday. “Germany cannot and
will not agree to that.”

A final report by European Union, International Monetary Fund and
European Central Bank on Greece’s progress is expected by mid-September.

Even if other Eurozone states are ready to release further funds,
Germany will block the transaction should it not be convinced that
Greece has met all requirements, Fuchs told the paper.

Fuchs reminded that Germany has a veto right on EFSF aid and that
“Germany will make use of that veto right” if not convinced Greece has
reached its targets.

Fuchs advised against the European Central Bank stepping in with
additional emergency loans. The ECB should not “open up detour
possibilities and make money available that the Greeks could not
otherwise get from the rescue funds EFSF or ESM,” he argued.

–Frankfurt newsroom +49 69 72 01 42; e-mail jtreeck@marketnews.com

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

Some of Italy’s largest banks  want their stakes in the Central Bank revalued to boost their balance sheets and help soften the impact of the Eurozone debt crisis, but opponents fear that this could “‘damage the reputation of Italian banks”

More …WSJ

GERMANY DATA: July WPI +0.3% m/m, +2.0% y/y; June +1.1% y/y
– Germany July WPI: solid fuels/oil products +1.5% m/m
– Germany July WPI: ore/iron/steel/non-ferrous metals -0.7% m/m
– Germany July WPI: grains/seeds/feed +0.5% m/m
– Germany July WPI: fruits/vegetables/potatoes +0.5% m/m
– Germany July WPI: data processing/communication -0.3% m/m
– Germany July WPI: food/beverages/tobacco unch m/m
– Germany July WPI: household electrical items/TV/radio -0.1% m/m
– Please see MNI Mainwire for further details

Up from June’s reading of -1.1% m/m and +1.1% y/y

If they’re running out of money, then heaven help the rest of us.

EUR/USD:  Bids 1.2260/70 and larger  down at 1.2240/50, sell stops below, good offers start from 1.2300/10, suggested buy stops up through 1.2330 ahead of offers 1.2380/00

GBP/USD:   Offers 1.5700/10 (UK Clearers, US funds)possible buy stops just above ahead of tech res  1.5720/25 (200 day MA 1.5723) and 1.5760/65 (100 day.MA  1/5762)  Bids 1.5660/70, 1.5600/20  and 1.5570/80 sell stops below

EUR/GBP: Offers 0.7870/80, 0.78895/05 and larger 0.7940/50.  Bids 0.7830/40, sell stops below through-0.7825 ahead of more bids 0.7800/10

USD/JPY:  Offers 78.30-50 and 78.75/85 buy stops above and through 79.00, tech res at 55/200 day MA's at 79.03 /18. Large bids at 78.00/10 (probably official). Large sell stops down through 77.90 ahead of barriers 77.75 and 77.50.

EUR/JPY: Bids 96.00/10 and 95.50/60 sell stops below ahead of more bids 95.30/40and 95.00./10. Offers 96.30/50(exporters, CTA's and funds)

AUD/JPY: Strong bids 82.40/50 (Japanese names) sell stops through 82.30 below and again through 82.00. Offers 83.00/10 likely buy stops above through 83.30

EUR/CHF: Bids 1.2000/10(SNB), Offers 1.2025/30

AUD/USD:  Offers from 1.0570 up to 1.0600 (RBA commercial, hedge funds) more offers from 1.0630 ahead of a 1.0650 barrier. Strong bids 1.0540/45 and 1.0500/10.  Sell stops through 1.0495. Bids below 1.0450/60 with further sell stops through 1.0445.

EUR/AUD:  Offers 1.1645/55 and tech res 1.1680/90. Bids/tech supp from 1.161/20

NZD/USD:  Offers 0.8130/40 and 0.8160/70. Bids 0.8080/90 sell stops below though 0.8075

Ballsy call from my favourite bank