EUR/USD sits at 1.2936 having been as high as 1.2945 so far in this session.

Talk is the ‘swiss mafia’ (group of swiss banks) has been selling round the highs capping the ascent so far.

More sell orders seen clustered 1.2960 through 1.3000 as reported earlier.

BERLIN (MNI) – German Chancellor Angela Merkel warned Friday not to
try to fight the Eurozone sovereign debt crisis by taking on
ever-increasing amounts of debt.

“I’m deeply convinced, if we fight this crisis now by creating new
debt and even more new debt then we will create a new bubble and will
experience another crash,” Merkel said at a business conference here.

If this happens “then people will become exasperated with our
economic order,” the chancellor said.

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

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

-Adds Detail To Version Transmitted At 0831 GMT

LONDON (MNI) – The UK economy appears to have rebounded strongly at
the start of the third quarter, with the dominant services sector seeing
a sharp rise in output.

The July Index of Services was up 1.1% on the month and up 0.7% on
the year, with the monthly rise the largest since May 2011. National
Statistics said the extra bank holiday in June for the Diamond Jubilee
may have contributed to the stronger monthly growth in July and Olympic
ticket sales also likely boosted output.

National Statistics records ticket sales, whenever they were
actually made, in the month at which the service was delivered. So the
first of the Olympic ticket sales are showing up in these July services
data.

UK GDP in the second quarter was revised up Thursday to show a 0.4%
fall on the quarter, and the Bank of England and many other economic
forecasters have been expecting a strong rebound in Q3.

The Olympics took place between July 27 and August 12, and National
Statistics noted the arts and recreation component of the July Index of
Services, where ticket sales are recorded, was up 3.7% on the month.

On a sectoral, year-on-year basis government services were up 1.6%
in July, business services up 0.8%, distribution, hotels and restaurants
up 0.2% while transport, storage and communication was down 1.0%.

The contributions to the 1.1% monthly rise in the Index of Services
came from a 1.2% rise in business services output, a 1.8% rise in
distribution, hotels and restaurants output and a 1.1% rise in
transport, storage and communication.

Other data issued by NS Friday highlighted the decline in UK
productivity, with Q2 labour productivity on an output per hour basis
falling 0.9% and market sector productivity down 1.5% on the same basis,
the weakest outturn since 2005.

NS also said two nationalised lenders, Northern Rock and Bradford &
Bingley, would be fully incorporated into central government debt and
borrowing from early 2013.

-London newsroom: +44 207 862 7491; email: drobinson@marketnews.com

[TOPICS: M$BDS$,M$B$$$,MABDS$]

LONDON (MNI) – The UK economy appears to have rebounded
strongly at the start of the third quarter, with the dominant services
sector seeing a sharp rise in output.

The July Index of Services was up 1.1% on the month and up 0.7% on
the year, with the monthly rise the largest since May 2011. National
Statistics said the extra bank holiday in June for the Diamond Jubilee
may have contributed to the stronger monthly growth in July and Olympic
ticket sales also likely boosted output.

National Statistics records ticket sales, whenever they were
actually made, in the month at which the service was delivered. So the
first of the Olympic ticket sales are showing up in these July services
data.

UK GDP in the second quarter was revised up Thursday to show a 0.4%
fall on the quarter, and the Bank of England and many other economic
forecasters have been expecting a strong rebound in Q3.

The Olympics took place between July 27 and August 12, and National
Statistics noted the arts and recreation component of the July Index of
Services, where ticket sales are recorded, was up 3.7% on the month.

On a sectoral, year-on-year basis government services were up 1.6%
in July, business services up 0.8%, distribution, hotels and restaurants
up 0.2% while transport, storage and communication was down 1.0%.

Other data issued by NS Friday highlighted the decline in UK
productivity, with Q2 labour productivity on an output per hour
basis falling 0.9% and market sector productivity down 1.% on the same
basis, the weakest outturn since 2005.

NS also said two nationalised lenders, Northern Rock and Bradford &
Bingley, would be fully incorporated into central government debt and
borrowing from early 2013.

–London newsroom: +44 207 862 7491; email: drobinson@marketnews.com

[TOPICS: M$BDS$,M$B$$$,MABDS$]

LONDON (MNI) – Bank of England Governor Mervyn King has said that
the BOE welcomes the Wheatley Review’s proposals to reform the
LIBOR-setting process, adding that he hopes the changes are implemented
as soon as possible.

“The Bank very much welcomes the Wheatley Review’s proposals to
improve the functioning, governance and regulation of LIBOR and would
want these to be implemented as soon as possible,” King said.

“Over the medium to long term, further thinking will be needed to
meet the challenge of benchmarks based on thinly traded markets,
especially when they are quote-based,” he added.

Today’s report from Financial Services Authority managing director
Martin Wheatley recommends that responsibility for LIBOR should be
stripped from the British Bankers Association and the number of
reference rates slashed to just 20 from the current 150.

The Wheatley report, commissioned in the wake of the LIBOR rigging
scandal, urges radical reform of the London interbank rate and says the
international community should look at alternatives to it.

Wheatley’s report makes clear it would not be practical to create a
short term replacement for LIBOR. It does, however, recommend a number
of sweeping changes and says bodies should tender to take control of
LIBOR from the BBA.

The UK Treasury has also backed his proposals and said the
government will seek to legislate the changes into law as soon as
parliament returns in October.

–London newsroom: +44 20 7862 7491;
e-mail:ukeditorial@marketnews.com

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

Not sure what happened with the Bloomberg headline, seems to have got cut short.

Up +1.1% m/m, +0.7% y/y.

From -1.5% m/m and -0.4% y/y in June- largest m/m rise since May 2011

Olympic ticket sales and autos leading the turnaround

Sharp turnaround from a year earlier which was a deficit of Eur 879.7 mln,  and a June deficit of Eur 257.2 mln;  first surplus for 15 years

• Must not fight the crisis by piling up more debt

Bloomberg headlines

I suspect it will go along the lines of Young Mr Graces’ catchphrase in Are you being Served…..

Which is?

First correct answer receives………..

FRANKFURT (MNI) – Liquidity conditions in the European interbank
market continued to decline over the last year as banks cut back on the
amount they borrowed and loaned to each other by an aggregate of 14% and
increased their preference for short term lending compared to last year,
data released by the European Central Bank show.

The ECB’s annual Euro Money Market Survey, which compares data from
the second quarter of the current year with the data from the same time
period a year earlier, shows that banks’ borrowings decreased 38% while
their lending to each other fell 31%.

As much as 83% of lending between European banks was overnight, an
increase of four percentage points. The proportion of overnight
borrowing, however, fell to 66% compared to 73% last year.

Secured lending remained the preference, and banks increased their
use of central counterparties, decreasing their direct exposure to each
other.

The Euro Money Market Survey also revealed a 50% fall in banks’ use
of overnight index swaps and a 16% fall in the use of other interest
rate swaps. Use of foreign exchange derivatives, by contrast, increased.

Banks responding to the survey generally indicated that liquidity
conditions had deteriorated in all segments of the market. Respondents
also judged that the efficiency of the unsecured market had eroded
markedly since 2011 but that the secured lending market and other market
segments had improved.

The deterioration in the interbank market comes despite the best
efforts of the ECB to inject life into the system, including E1 trillion
of cheap three-year loans to Eurozone banks in longer-term refinancing
operations conducted at the end of 2011 and in early 2012.

The results of the survey also suggest that policymakers’ efforts
to restore confidence in the banking system by imposing stress tests and
higher capital reserve requirements have yet to bear fruit.

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

Above expectations of  +0.3% m/m, +2.5% y/y and last month’s readings of +0.3% m/m and +2.1% y/y- ISTAT

Yes we’ve arrived at Friday.

There’s been talk all week that there is lumpy EUR/GBP (circa 3 bln euros) to be sold at the 12:15 GMT ECB fix.  It’s apparently related to EU’s subsidy payment to UK farmers.

Now that’s all well and good.

Maybe I’m a little cynical, but I wonder if the rumoured 3 billion is a true representation of the actual figure and I also wonder if some/large portion has already been covered.

Obviously on the otherside of the coin, there’s the usual month-end Buba buy interest in the cross to bear in mind.

We sit presently at .7963, up about 10 pips since I dragged my sorry arse somewhat belatedly to my desk.

Although I’ll have finished for the week by 12:15 GMT, I’ll be looking in to see whether there are any fireworks….

Could be interesting…………or maybe not

Pays ya money, takes ya chance

FRANKFURT (MNI) – Cyprus’s banking system will undergo independent
stress tests, at the request of the Troika, in order to determine the
capital needs of each bank, the Central Bank of Cyprus said Friday.

The exercise, including an “asset quality review and a bottom-up
stress test,” will be conducted by PIMCO together with Deloitte and
monitored by a committee of Cypriot and European authorities.

The stress test will include Bank of Cyprus, Cyprus Popular Bank,
Hellenic Bank, Co-Operative Central Bank, the Limassol Co-Operative
Savings Bank, Eurobank EFG Cyprus and Alpha Bank Cyprus.

Cyprus is in the middle of negotiations with the Troika – made up
of the European Central Bank, the International Monetary Fund and the
European Commission – on a series of fiscal and banking reforms after
the country sought aid for its ailing banking system from the Eurozone’s
EFSF rescue fund. The talks should be concluded by the end of October,
Cyprus’ central bank President Panicos Demetriades said Tuesday.

The “Steering Committee” that will monitor Cyprus’ stress tests
will include the Troika as well as members of the EFSF/ESM rescue funds
and the European Banking Authority.

The results will be published by the Central Bank of Cyprus once
approved by the Steering Committee. The central bank did not give an
estimated time for completion of the stress tests.

– Frankfurt bureau: +49 69 720 142; email: frankfurt@mni-news.com –

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

EUR/USD: Offers from 1.2960 layered up to 1.3000, but buy stops mixed in through 1.2975. Bids 1.2880/00 sell stops through 1.2875 ahead of bids again 1.2850/60, sell stops below. tech support below (200 day MA 1.2825), through 1.2820 ahead of more bids 1.2800/10 sell stops through 1.2800 ahead of more bids 1.2785/95

GBP/USD:  Bids 1.6225/35 (CTA's), 1.6165/75 and 1.6150/60 sell stops below and through 1.6100. Offers 1.6280 up to 1.6310UKclearers and US names (1.6309 Sept 21 high)

EUR/GBP:  Bids 0.7925/30, likely sell stops below and tech support/bids 0.7900/10 (0.7912- 55 day MA). Offers/tech res at 0.7975/80 (38.2% retracement of July 22-Sept 14 rally 0.7977) and 0.8000/05 (50% of 5-14 Sept rise 0.8001)

USD/JPY: Bids 77.40/50 (semi official) sell stops below ahead of large bids 77.00/20 and large sell stops below. Offers from 77.80 up to 78.00, buy stops above ahead of more offers 78.30/50

GBP/JPY:  Bids 125.60/70, 125.30/40 and 125.00/10 (125.10- 200 day MA) with sell stops on a break of 125.00. Offers 126.05/15 possible buy stops above and more offers up at 126.60/70

EUR/JPY: Bids 100.00/10, 99.70/80 and 99.50/60 large sell stops below ahead of tech support 98.94 (98.95- 50% retracement of July-Sep rally). Good offers100.40/50, 100.75/85 and 101.00/10.

AUD/JPY: Bids 80.80/90, sell stops below ahead of more bids 80.50/60. Bids/tech supp 80.00/15 (Sept 6 low 80.11) sell stops below. Offers up at 81.10/20 and larger at 81.30/50.

AUD/USD: Bids 1.0420/40 (corporates , exporters), tech supp 1.0422 (55 day MA), more bids 1.0400/10 with sell stops just below. And through 1.0380. Offers from 1.0470 up to 1.0500, possible buy stops just above ahead tech res from 1.0520/50 (Sep 21 and 17 highs- 1.0520 and 1.0544)

EUR/AUD:  Bids 1.2355/65, probable sell stops through 1.2350 ahead of more bids 1.2330/40. Tech res 1.2390/00 (200 day MA 1.2398), offers 1.2450/60, larger up at 1.2490/00

PARIS (MNI) – France’s outstanding gross public debt rose E43.2
billion in 2Q to E1.833 trillion, amounting to about 91.0% of GDP, up
1.7 points from 1Q, the national statistics institute Insee estimated
Friday.

The increase came from the central government, where the debt
increased by E51.3 billion to E1.433 trillion, including E9.8 billion in
loans from the EFSF to Eurozone bailout countries. In net terms, the
quarterly rise was smaller, as cash holdings jumped by E16.6 billion.

The indebtedness of the social security system declined by E8.2
billion in 2Q to E228.4 billion, though cash holdings also dropped, by
E7.5 billion.

Local governments increased outstanding debt by a slender E400
million to E161.3 billion. Other administrations trimmed their debt by
some E300 million to E9.7 billion.

The government aims to reduce its budget deficit to 3% of GDP in
2013 after a targeted ratio of 4.5% this year. Even if it succeeds, the
debt ratio will continue to mount next year. However, the government is
expected today to confirm that it is slashing its 2013 growth target to
0.8% from 1.2%, a downgrade that comes on top of already stagnant GDP –
at best – this year.

The lower growth not only will make it tougher for the government
to hit its deficit target, as revenues decline, but will also depress
the denominator of the debt-GDP ratio, making it doubly likely that the
ratio will be higher than previously expected.

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

And release those moths….

Hit this link and donate to Forexlives’ favourite charity.

We’re at $1600.

I want to see it over $3000 by the end of the day.

If it isn’t there’ll be no weekend press converage and from next week no orderboards.

FRANCE DATA: AUG PPI +1.2% M/M, +2.6% Y/Y; JUL +0.4 M/M, +1.3% Y/Y}
–AUG MFG PPI +1.3% M/M,+2.4% Y/Y;JUL +0.4% M/M,+1.0% Y/Y}
–AUG OIL PRODUCT PRICES +7.8% M/M, +16.1% Y/Y}
–JUL-AUG FOOD, TOBACCO PPI +0.8% M/M, +2.9% Y/Y}
–JUL-AUG INDUSTRY IMPORT PRICES +1.6% M/M, +4.0% Y/Y}
–PUBLIC DEBT ROSE E43.2 BN IN 2Q TO 91.0% OF GDP: INSEE}

FRANCE DATA: August sa consumer spending on goods -0.8% m/m, -0.5% y/y
– France consumer spending below expected: MNI median -0.3% m/m
– France July sa consumer spending on goods +0.4% m/m, +1.0% y/y
– France July+August consumer spending +0.3% vs 2q; 2q -0.2% q/q
– France June goods spending revised to +0.4% m/m from +0.1% m/m
– Please see MNI Mainwire for further details

And “if” this old boy wins this weekends’ UK lottery he could be worth a few bob.