Spain 10 year govt bond yield down 11 bps at 5.62%.

Italy 10 year govt bond yield down 7 bps at 5.03%.

We sit at 1.2895.

What’ll we see first, 1.2800 or 1.3000?

Reason/s for choice appreciated, but not obligatory.

HELSINKI (MNI) – There is a considerable chance that the negative
economic and financial dynamics in the Eurozone will continue, though
things could also turn out better than expected, the Bank of Finland and
its governor, Erkki Liikanen, said Wednesday.

“There is a substantial risk that the unfavourable spiral in the
euro area will continue, with recovery being even slower than forecast,”
the Bank of Finland said in a statement accompanying a press conference
by Liikanen on monetary policy and the global economy.

Elaborating on the risk, the central bank noted that the economies
of crisis countries could be weaker than expected, and there could be
renewed doubts about the effectiveness of policy measures, possibly
matched by increased capital flight.

But despite Europe’s economic fragility, “better-than-forecast
developments are still possible,” the bank quoted Liikanen as saying.
“If Europe is able to build a credible crisis strategy, market
confidence may strengthen faster than assumed, which would halt the
flight of capital and reduce financing costs for financial stressed
countries.”

Still, the Bank of Finland noted a deterioration in the global
economic outlook as caused “adverse effects on the management of the
sovereign debt crisis.”

Liikanen cautioned that the reforms in Europe needed to surmount
the crisis are only just beginning, and “based on previous experience
from financial crises, there may be several more years to go.”

Due primarily to events in Europe, risks to the global economic
recovery are “weighted to the downside,” and that “will make recovery
even slower than forecast,” the Bank of Finland statement said.

Liikanen also reiterated comments by some of his ECB Governing
Council colleagues to the effect that the new OMT bond buying program
unveiled last Thursday was aimed at safeguarding monetary policy
transmission and the “singleness” of monetary policy, “without changing
the division of responsibilities between member states and the ECB.” He
stressed, as has ECB President Mario Draghi, that the OMT program is in
line with the bank’s price stability mandate.

“It is important to emphasize,” Liikanen added, “that as a monetary
policy measure, the OMT will be applied in equal terms to all euro area
countries.” He later elaborated that all countries wishing to benefit
from the OMT bond buys must apply for an aid plan with the same rules.
“There are no country-specific actions.”

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

-Aug Claimant Count Unemployment -15,000; rate 4.8%
-Jul Claimant Count Unemployment revised to -13,700 from -5,900
-Jul Average Weekly Earnings total pay +1.5% vs +1.8% in Jun
-May-Jul ILO Unemployment -7,000; Rate 8.1%

LONDON (MNI) – Claimant count unemployment fell sharply in August,
possibly helped by temporary hiring for the Olympics, but still showing
remarkable resilience in the face of stagnant growth, figures from
National Statistics revealed Wednesday.

The claimant count has now fallen by around 30,000 since the start
of the year, with most of that in the past two months. This strength in
the labour market has been puzzling economists and these data will add
further to the debate. It does seem likely, however, that the Olympics
has boosted short-term hiring over the past few months. But changes in
the benefit system have boosted the claimant count recently, meaning
that without these unemployment would have fallen even more.

The claimant count fell 15,000 between July and August, the largest
monthly drop since June 2010 and significantly below the median forecast
for unchanged. It followed a 13,600 decline in July, revised from an
originally estimated 5,900 decline.

London accounted for a significant part of the decline in the
latest month, with the claimant count down 5,500 in the capital. A
similar picture was seen last month, with the count down 4,500 in
London, and possibly points to Olympic hiring cutting the claimant count
temporarily.

Special factors also worked the other way, though, with cuts to
lone parent income support mean more women have applied for
Job Seekers Allowance in recent months. Latest data show this boosted
the claimant count by 6,950 in July which seems likely to have been
repeated in August.

The less timely, but official, ILO measure of unemployment fell
just 7,000 in May-Jul compared with Feb-Apr, with the unemployment rate
remaining steady at 8.1%. The ILO measure of unemployment lags the
claimant count and it seems likely that we will see increased falls
ahead.

Employment growth rose a massive 236,000 in the latest three month
period, the largest rise since the three months to July 2010. Much like
the claimant count figures, this seems out of place with the current
stagnant growth rate in the UK economy, adding further to the puzzle
surrounding labour market data.

Hiring from the Olympics may well have helped boost employment with
London adding 91,000 of the jobs in the latest three months. The rise in
employment across the UK was broadly evenly split between part-time and
full-time employment.

Earnings growth continued to remain subdued as it has done since
the start of the financial crisis. Headline Average Weekly Earnings
growth eased to 1.5% in the three months to July compared with a year
earlier, from 1.8% in June. This was in line with the median
forecast.

Regular average weekly earnings, which exclude bonus payments, rose
slightly to 1.9% from 1.8%, also in line with the median.

-London bureau: 00 44 207 862 7491 e:mail: puglow@marketnews.com

[TOPICS: MABDA$,M$B$$$,MT$$$$,MABDS$]

UK DATA: Aug Claimant Count Unemployment -15,000; rate 4.8%
-Jul Claimant Count Unemployment revised to -13,600 from -5,900
-Jul Average Weekly Earnings total pay +1.5% vs +1.8% in Jun
-May-Jul ILO Unemployment -7,000; Rate 8.1%
————————————————————————
Claimant count unemployment fell sharply in August, possibly helped
by temporary hiring for the Olympics, but still showing remarkable
resilience in the face of stagnant growth. The claimant count has now
fallen by around 30,000 since the start of the year, with most of that
in the past two months. This strength in the labour market has been
puzzling economists and these data will add further to the debate. It
does seem likely, however, that the Olympics has boosted short-term
hiring over the past few months. But changes in the benefit system have
boosted the claimant count recently, meaning that without these
unemployment would have fallen even more.

German court ruling  and euro surge pulled cable up  through a 1.6100 barrier to highs of 1.6128.  Above the day’s high is some resistance at 1.6130 (May 11 high) and then 1.6182 (May 10 high)  ahead of offers 1,6190/00

GBP/USD’s drifted back to 1.6613 and EUR/GBP’s off  its highs of 0.8010 around 0.7990 after touching day’s lows of  0.7970 on the news release.

Better than Reuters’ median forecast of unchanged.

Biggest fall since June 2010.

Claimant rate 4.8%, better than median forecast of 4.9%

UK Ilo jobless -7,000 in 3 months through July. Rate 8.1% vs median forecast of 8.0%.

There’s no stopping this boy!! Well done Pete and all that went for 1.2900 in the latest poll.

For the 1000NY/1400GMT cut

EUR/USD: 1.2700, 1.2715, 1.2800, 1.2850

USD/JPY: 78.00, 79.00, 80.00

EUR/JPY: 99.70, 100.00

GBP/USD: 1.5950, 1.5975, 1.6000

EUR/GBP: 0.8000

AUD/USD: 1.0370, 1.0400, 1.0475

USD/CAD: 0.9700, 0.9925

• Allows ratification of ESM/fiscal pact under certain conditions
• Germany must ensure German liability to ESM does not exceed 190 bln euros without approval of lower house of parliament (this had been expected)
• Both houses of parliament must be informed about ESM decisions
• Rejects complaint against ECB bond buys

Conditions not that onerous.

EUR/USD rallies to session high 1.2902. 

No surprises in that little lot.

The complaints seem to have been enough to unsettle the euro. EUR/USD dipped quickly to session low 1.2817 before rebounding equally quickly, presently at 1.2850.

PARIS (MNI) – Today’s oil market is caught between a fragile global
economy, which creates downside risks to demand, and geo-political
turmoil, chronic supply disruptions and the “Iranian premium,” which are
creating upside price pressures, the International Energy Agency said
Wednesday.

“The idea of an oil market torn between opposing bullish and
bearish forces became widely accepted as the fizzling of the economic
recovery and a slowdown in demand growth served as a bearish backdrop
for market disruptions and ongoing geopolitical concerns on the supply
side,” the IEA said in its monthly Oil Market Report. “It has since
reached a new paroxysm.”

The recent price rally “set off alarm bells in the world’s
capitals” at the same time as sanctions against Iran removed “large
volumes of oil” from the market, the agency noted.

While the IEA left its projections for global demand growth this
year and next unchanged at around 800,000 barrels per day (b/d), it
hiked average expected demand levels by 100,000 b/d to 89.8 million b/d
this year and to 90.6 mb/d for 2013 due to upward revisions for last
year.

“There have even been some bullish signals on the demand side as
estimates of global demand, belying bearish forecasts, beat
expectations” during the first half of this year, the agency noted.

Moreover, not all the supply news is bullish, as North American
shale gas is creating a “supply bonanza”, while Iraqi output recently
rose to highs unseen since the Iran-Iraq war, it added.

As projections were unrevised for non-OPEC supply growth of 400,000
b/d this year and 700,000 b/d next year, the IEA hiked the expected
“call” on OPEC crude and/or stocks by 100,000 b/d to an average of 30.3
mb/d for this year and to 30.2 mb/d for next year. The “call” is
expected to peak in the current quarter at 31.1 mb/d, then fall back to
30.6 mb/d in 4Q.

Global oil supply dipped by 100,000 b/d in August to 90.8 mb/d in
August from upwardly revised July estimates, as OPEC liquids production
growth failed to offset fully the unplanned outages in non-OPEC
countries.

OPEC crude oil supply edged up 45,000 b/d to 31.55 mb/d. Angola and
Nigeria posted the largest increases, while Saudi Arabia, Iran and Libya
posted declines. OPEC’s effective spare capacity is estimated at 2.49
mb/d. Non-OPEC supply fell by 200,000 b/d in August and was 100,000
lower on the year.

OECD industry crude stocks fell by 16.5 million barrels in July and
are estimated 23.7 mb lower in August as a result of strong refining
crude runs. But products stocks rose by 32.8 mb and 4.2 mb,
respectively. “Total industry oil builds of 10.6 mb for July were below
normal and preliminary data hint at counter-seasonal draws in August,”
the IEA said.

“On a forward demand basis, inventory cover looks more comfortable,
due mostly to diminishing demand prospects through October,” it said.
Total OECD stock cover now stands at 58.3 days, 0.2 days above end-June
and 0.6 days above a year ago.

“OECD inventory readings, once a reliable proxy for global stock
movements, are losing relevance as non-OECD economies catch up with
mature economies in oil use and OECD stock draws come along with large
but unreported builds in non-OECD countries,” the agency acknowledged.

“The rise of those implied stocks has been nothing short of
dramatic,” it said, citing the 2.2 mb/d jump in its “miscellaneous to
balance” item in the first half of this year.

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

[TOPICS: MI$$$$,MI$OI$,M$$CR$,MAUDS$]

ITALY DATA: July SA industrial output -0.2% m/m, WDA -7.3% y/y, as
output in all sectors except for energy goods contracted, ISTAT said.
–June SA ind output -1.3% m/m (vs previously reported -1.4% m/m)
–July unadjusted y/y output -4.4% Vs -7.9% y/y in June.
–There were 22 working days in July 2012, vs 21 in July 2011

…But only if it banishes doubts about it’s reform capabilities  and commitments

• Turning point on Greece possible this autumn
• Solving tax fraud could yield billions (….no shit sherlock)
• ECB has a duty to restore monetary policy integrity and bond buying in the secondary market is within its mandate
• A single supervisor is a stepping stone to bank union in Europe
• Parliament to have oversight role on supervisor
• EU needs community economic  governance, needs to move towards fiscal union
• EU commission will publish economic blueprint this autumn to outline possible treaty changes
• Need for stronger european political parties and to strengthen the role of the european parliament
• Calls for  federation of nation states, not a ‘super-state’

Bloomberg headlines

And im reaching for that can of petrol and a match again….

• Europe’s adjustment process now at outset, may be several more years (happy dayz)
• Bank of Finland sees subdued growth in world economy in late 2012, 2013
• ECB’s outright monetary transactions require strict conditionality, applied equally to all euro countries
• Euro zone bank supervisor top priority now
• Supervisor crucial first step towards banking union

Honestly  I’m discombobulated….. (great word  eh!)

(he’s confusing the shit out of me  after the early headlines in the Finnish press)

• Still need to consider condiutions of ECB borrowing
• Will see how bond yields perform in coming days
• Still need to see if a bailout is ‘necessary’
• Still doesn’t know what conditions of a bailout would be

BERLIN (MNI) – Lars Feld, a member of the German government’s
council of independent economic advisers, the so-called five wise men,
said Wednesday the ECB would likely start buying bonds without any
conditionality should the German Constitutional Court block Europe’s
planned permanent bailout fund ESM today.

The court will deliver a ruling today on whether it will grant an
injunction against the ESM and the EU fiscal compact.

“If the ESM does not come about then the ECB will have to buy
bonds, possibly on very short notice without any conditionality,” Feld
told German ARD public television today.

The government adviser said, though, the most likely scenario is
that the court will approve the ESM.

A government spokesman on Monday also said the government “is
convinced that the ESM is in accordance with the constitution.”

President Joachim Gauck has said he will not sign the laws on the
ESM and the fiscal compact until the court has ruled on the injunction.

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

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

• Won’t accept speculative yen moves
• Will definitely take bold action on yen if needed

Bloomberg reporting.

We mean it, WE REALLY DO!!!……………………….

EUR/USD:  Offers 1.2880/00 (1.2900 barrier) buy stops on a break. Strong tech res above at 1.2930/35 (1.2934- 61.8% retracement of the year's fall). Bids1.2845/55 likely sell stops below, ahead of tech support 1.2830/35 (1.2832 -200 day MA) and more bids 1.2800/10 and 1.2760/70 with likely sell stops just below each.

GBP/USD:  Offers 1.6080/00 and tech res 1.6115/25 (May 7 low 1.6115 and May 14 high 1.6124). Bids 1.6050/60, 1.6030/35 (tech) and more bids 1.6000/10, likely sell stops below through 1.5990.

EUR/GBP:  Offers 0.8000/10 possible buy stops above ahead of  tech res 0.8040/45 (0.8042 July 5 High). Bids 0.7970/80 (tech 100 day MA 0.7972) and 0.7925/35 ahead of stronger bids 0.7900/10 (55 day MA 0.7902)

USD/JPY:  Bids 77.70/80 (likely semi-official, Japan Life co's, importers). Sell stops through 77.65 and larger through 77.50 (barrier) Offers from 77.90/00 possible buy stops above ahead of more offers from  78.30 up to 78.50 (exporters)

EUR/JPY: Bids 99.90/00 and 99.60/70 ahead of tech supp 100 day MA at 99. Offers 100.40/50 (tech res 100.43 Fri high) likely buy stops above ahead of further tech res 100.80/85 (100.84 July 3 high)

AUD/JPY:  Bids 81.30/40 and  81.00/10  ahead of  tech supp 100 day MA 80.70 ahead of more bids 80.30/40. Offers offers up at 81.75/85 (200 day MA 81.81, 81.79 cloud top), and 81.90/00, buy stops just above

EUR/CHF: Offers 1.2090/00, larger up at 1.2150/60 (Fri high 1.2156) possible buy stops above. Bids 1.2060/70 and 1.2040/50

AUD/USD:  Bids at 1.0430/40 sell stops below ahead of more bids 1.0400/10. Tech res 1.0525/45 (1.0529 high Aug 23, 1.0545 high Aug 22), buy stops through 1.0550.

EUR/AUD:  Offers tech res 1.2300/10 (100 day MA 1.2301), and 1.2320/30, Bids 1.2270/80 and tech support 1.2230/40 (1.2233 Fri low)

NZD/USD:  Tech supp 0.81.70/75, likely sell stops just below. Offers/ strong tech res 0.8225/35

‘But, unlike in France, this Dutch poltical shift won’t mark a turning point against austerity’

So says The Guardian.

Personally I thought it might.  Goes to show what I know. Dutch politics not a strong interest of mine…….