• Forex moves clearly not reflecting current state of Japan economy
• Current specualtive moves unacceptable

YOU’VE BEEN WARNED!!!

Some sell stops went through on  a break down  of 77.60 to lows of 77.58, but barrier protecting and possible semi official bids are  so far mopping up the out flows from European and Japanese names.

There are some more stops through 77.50 ahead of bids in front of the next barrier down at 77.00

USD’s currently trading around 77.64

Oh dear…..

UPDATE:  Yemeni demonstrators storm the US embassy in Yemeni capital  Sanaa,  security forces open fire.

–Outcome Significantly Weakens The Hand Of Euro-Sceptic Parties

AMSTERDAM (MNI) – The Netherlands’ liberal party VVD, lead by
caretaker Prime Minister Mark Rutte, has won the Dutch national
elections, according to the preliminary vote count.

Final results will be released Monday.

The center-right VVD won 41 seats in the 150-seat Dutch parliament.
The center-left Labour party PvdA, led by former Greenpeace activist
Diederik Samsom, came in a very close second with 39 seats. VVD thus
gains 10 seats in the parliament, its best showing ever. PvdA will have
nine more seats in the new parliament than in the current one.

Negotiations for a new government will start today.

Because the number of seats needed to form a parliamentary majority
is 76, the VVD and PvdA could govern together in a two-party coalition.
Both parties have been attacking each other fiercely during the
campaign, successfully targeting undecided voters.

The irony: VVD won a lot of strategic votes from people who only
supported it as a means of blocking PvdA. And the reverse is also true.
Now the two parties are doomed to cooperate in the next government.

The outcome also makes it very likely that the next government of
the Netherlands will maintain a reluctant but pro-Europe course
supporting the austerity policies championed by Germany. Rutte, the
prime minister and VVD leader, has harshly criticized European rescue
operations for banks and for peripheral Eurozone governments, and he has
spoken out against further European political integration. But he is
expected to prove less anti-European once he is back in power.

In a major upset in Dutch politics, other parties will now be too
small to allow the possibility of either a left-wing or right-wing
government – unless the VVD is willing to repeat its failed cooperation
with the far-right Freedom Party (PVV), which supported the minority
government of Liberals and Christian-democrats (CDA) that fell this
spring.

Even then, VVD and PVV would need the cooperation of at least two
other parties, none of them being very eager to join hands with the
Freedom Party’s firebrand anti-immigrant leader Geert Wilders. Labour
could conceivably get a small majority in combination with all of the
six parties that have left-leaning sentiments.

It is possible that the small social-liberal D66 party, also a
winner with 12 seats, could join with the two top parties in what would
be a repeat of the so-called “Purple Coalition” that governed the
Netherlands from 1994-2002. VVD and PvdA together have 80 seats, enough
to govern. But cooperation with other parties would be desirable in
order to get a majority in the upper house of parliament, which might
otherwise block legislation by the new government.

Another possible partner would be the Christian-democrats, CDA.
Although they had another disastrous election result, they might still
opt for joining the government. However, after their second big election
defeat in a row, that might not be a viable option.

The euro-sceptic Socialist party (SP) will have 15 seats in the new
parliament, according to the preliminary results. Wilders’ Freedom
Party, also staunchly anti-Europe, will get 15 seats as well, down 9
from the current parliament.

Voter turnout in the election was about 74 per cent, slightly less
then the last elections in 2010.

Samsom’s Labour Party had made a strong, surprising comeback in the
last two weeks of the campaign, closing a big gap with VVD. Only one
month ago Labour had been expected to take only 20 seats, ten less than
in the current parliament and 19 less than what it will get following
Wednesday’s vote.

The socialists, who had been riding high in the opinion polls,
moved in the opposite direction, declining sharply in the weeks leading
up to the election. The socialists’ 15 seats is less than half the 34
seats that they had been expected to win a month before the election.

The sharp drop in support for Wilders’ Freedom Party, which put
strong anti-Europe pressure on Rutte’s government, should make it much
less of a factor in the new parliament.

VVD and Labour were also the biggest parties in the 2010 elections,
which Rutte’s party won with a razor thin margin of one seat. The two
parties failed to come to an agreement in 2010. Instead VVD formed a
minority coalition with the Christian-democratic CDA, and with the
support from the Freedom Party.

That minority government fell last spring after it was unable to
agree on the spending cuts and tax increases needed to reduce the Dutch
budget deficit to the EU’s 3%-of-GDP limit by 2013. Shortly after the
government fell, an ad hoc majority of five parties, including VVD but
excluding PvdA, was able to agree on the necessary cuts.

According to eminent Dutch economist Bas Jacobs, only three Dutch
parties have an electoral programme that is fully consistent with the
long-term survival of the Eurozone: Labour, the Greens, and D66. But
together, they would not have a majority.

Rutte’s VVD opposes a European banking union and is against
transferring more sovereignty to Brussels. However, it is expected that
the liberals will take a softer stance in the new government. The
Socialists and the Freedom Party are the most anti-Europe parties.

The result of the elections are being hailed in the Netherlands and
internationally as a defeat of the euro-sceptics. They can also be
interpreted as a flight to the safety of the middle. The strong results
for centre-left PvdA and centre-right VVD were unexpected and seem to
have ended – at least for the moment – the ongoing fragmentation of
Dutch politics, in which a lot of votes had gone to populist parties on
the left and the right. The last time the VVD and PvdA had a majority
together was in 2003.

Although the Liberals and Labour must cooperate, the formation of a
new government might not be easy, because both parties will be trying to
capitalise on their big wins. Although they more or less agree on Europe
and the euro, in national affairs they differ on most issues, including
taxes, pensions, health care and the housing market, which is in a major
slump that is dragging down the Dutch economy.

Political commentators expect either very quick coalition talks
with agreements on the main issues, or negotiations that drag on for a
long time, resulting in a very detailed agreement.

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

ITALY DATA: Final Aug HICP revised down to 0.0% m/m is +3.3% y/y,
down from the +3.6 y/y rise in July.
- The main domestic index (NIC) was revised up to +0.4% m/m,
+3.2% y/y accelerating slightly from +3.1% y/y in July.
- Core NIC inflation down slightly at +2.1% y/y
- Net-of-energy down slightly at +2.2% y/y

Apart from Macro sellers up towards the 1.0480/00 level, the recently announced downgrade of Queensland by Fitch isn’t helping matters either (although somewhat expected).

AUD/USD’s just slipped to a day’s low of 1.0430 and filling in the bids i mentioned on the order board. There are more lying down at 1.0400/10.

EUR/AUD’s heading up to challenge Tuesday’s  1.2381 high  with a recent day’s  high of  1.2376; and the move could well accelerate on a break of 1.2400 towards 1.2525/30

UPDATE:  Talk also of a lot of 1.0475 option strikes rolling off today and a reliable source in Sydney tells me Asian names could be vulnerable to a short squeeze. AUD’s currently at 1.0436

BERLIN (MNI) – The German economy is still in a good state but more
challenging times lie ahead, Economics Minister Philipp Roesler said
Thursday.

“The German economy is robust,” Roesler said in a speech in
parliament. Yet, “we all see that the economic development will become
more difficult,” he acknowledged.

The minister pointed to economic weakening in Europe, the US and in
many emerging markets. An export-dependent economy like Germany cannot
decouple from such global developments, he reasoned. “That is why we
expect a dampened economy next year as well.”

The Eurozone can overcome its debt crisis if member states adhere
to a consistent policy of reducing deficits and increasing
competitiveness, Roesler argued.

“If this succeeds, then I’m firmly convinced that our common
currency, the euro, can become one of the most stable currencies of the
world,” he said.

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

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

AUD/USD at session low 1.0431.

• Possible hard landing would pose risks to the global economy
• US fiscal cliff  and European crisis are risks to the global economy
• No signs of world economy stabilizing
• Chinese and Japanese exports to Europe are slowing

…Another “doom and gloom” merchant

Bloomberg reporting

• Will stick to cap on franc of 1.2000 per euro
• Prepared to buy fx in unlimited quantities
• Will continue to aim for 3-month libor at 0-0.25%
• Swiss franc is still high, appreciation would have serious impact on swiss prices, economy
• Sees 2012 inflation at -0.6% (from prev forecast of -0.5%)
• Sees 2013 inflation at +0.2% (from prev forecast of +0.3%)
• Sees 2014 inflation at +0.4% (from prev forecast of +0.6%)
• Sees 2012 growth at some +1.0% (from prev forecast of +1.5%)
• Downside risks to the Swiss economy will also stay high in the near-term
• Growth dampened by the euro area crisis and the uncertainty surrounding forthcoming fiscal policy decisions in the US
• Strong momentum on swiss residential mortgage and real estate markets poses risks for financial stability over medium term
• Does not see inflation approaching 2% price stability threshold for entire forecast horizon

Reuters’ reporting.

Everyone who said no peg change in this mornings’ poll give yourself a well-deserved pat on the back

Whoops.  Newswire, who will remain nameless, cocked up the headline.

Bummer

Cancel the jelly and icecream

Whoopie!!!!!!!

Jelly and icecream for everyone

Demonstrably stronger than prior months’  -0.3%, -1.8% respectively…

• No one will bet against unlimited ECB firepower
• ECB may not be ready for negative deposit rate
• Sees no real need to sterilize any bond purchases
• Europe needs to focus more on growth
• Doesn’t expect Cyprus bailout agreement this month
• Sees no inflation risk

The Central Bk of Cyprus chief was  speaking in Nicosia

Sits at 1.0445.

What’ll we see first, 1.0350 or 1.0550?

Reason/s  for choice as usual most welcome, but no obligatory.

I personally think this is a rather interesting poll given all that’s going on…… (but then that’s just me)

Following EU Commission Pres Barroso calls for a European federation ….

A senior source told The Daily Telegraph that Whitehall officials and government lawyers had already begun considering how to deal with a referendum  on a “recommendation that Britain stays in the EU without joining a political union”.

More…. UK Telegraph

Italy 2 year note up 7 bps at 2.26%

Spain 2 year note up 7 bps at 2.89%

EUR/USD drifts back to 1.2915 from 1.2932 session high.

Can’t believe it, but there’s still speculation out there……

EUR/USD:   Strong offers/ tech res above at 1.2930/50 from Dutch names and option protection (1.2935- 61.8% retracement of the year's fall, 1.2950 barrier), buy stops above ahead of more offers 1.2980/00 (1.3000 barrier). Bids 1.2900/10, some weak sell stops just below ahead of more bids  from 1.2880 down to 1.2850. Likely sell stops below, ahead of tech support 1.2830/35 (1.2830 -200 day MA) and more bids 1.2800/10

GBP/USD:  Offers 1.6125/35 (1.6131 Wed high) likely buy stops through 1.6135 ahead of tech res/offers 1.6180/00.  Bids 1.6070/80 ahead of tech supp 1.6030/35 and more bids 1.6000/10. Sell stops below through 1.5990.

EUR/GBP:  Offers 0.8025/30 likely buy stops above ahead of  tech res 0.8040/45 (0.8042 July 5 High). Bids 0.8000/10, tech supp 0.7970/75 (tech 100 day MA 0.7971) and 0.7925/30 ahead of stronger bids 0.7900/10 (55 day MA 0.7902)

USD/JPY:  Bids 77.50/70 ( semi-official, Japan Life co's, importers, 77.50 barrier). Sell stops through 77.50 ahead of more bids 77.00/20 (77.00 barrier). Offers from 77.90 up to 78.00 possible buy stops above ahead of more offers from  78.30 up to 78.50 (exporters)

EUR/JPY: Bids 100.30/40 and 100.00/.10, likely sell stops below ahead of stronger support 99.60/70. Offers/tech res from 100.80 up to 101.00 touted barrier (100.84 July 3 high). Buy stops above 101.00

AUD/JPY:  Bids 81.00/10 ahead of tech supp 100 day MA 80.67 and ahead of more bids 80.30/40. Offers 81.50/60 and 81.80/00 (200 day MA 81.82, 81.93 cloud top), buy stops above

EUR/CHF: Offers 1.2110/20, larger up at 1.2150/60 (Fri high 1.2156)  buy stops above through 1.2160. Bids 1.2090/00 and 1.2060/70

AUD/USD:  Bids at 1.0430/40 sell stops below ahead of more bids 1.0400/10. Offers 1.0490/00 (macro funds) ahead of tech res 1.0525/45 (1.0529 high Aug 23, 1.0545 high Aug 22), buy stops through 1.0550.

EUR/AUD:  Bids 1.2320/30 and tech supp 1.2295/05 (100 day MA 1.2297), Offers 1.2380/90.

NZD/USD:  Bids from 0.8180 down to 0.8150, likely sell stops just below. Offers/ strong tech res 0.8225 up to 0.8250 with buy stops above.

Oh dear

Shares fall 14%.

AUD/USD down at 1.0455 from the 1.0480 which greeted me.  Guess the above news will be weighing.