Unchanged from June. EU- harmonised inflation +0.9% y/y from +1% in June

I just luv audience participation

…from -29.6 in July, but not as bad as expected (-31.0). 5th straight fall and lowest level for over 3 yrs.

Expectations however picked up  fractionally from -24.0 in July to -23.3, but current situation sub index  fell to -37.0 from -35.0 in July

Yer, loose lips sink ships

• We need more democratic legitimacy in Europe

BERLIN (MNI) – Peter Gauweiler, a conservative German backbencher,
has broadened his complaint with Germany’s Constitutional Court against
Europe’s planned permanent bailout fund ESM, to include opposition to
any banking licence for the ESM, the German daily Frankfurter Allgemeine
Zeitung reported Monday.

The Constitutional Court is scheduled to deliver a ruling on
September 12 on whether it will grant an injunction against the ESM and
the EU fiscal compact.

German 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$G$$$,M$X$$$,MGX$$$,M$$CR$]

LONDON (MNI) – UK car registrations continued to rise in June,
posting their fifth consecutive increase on the year.

Car registrations were up 9.3% on the year in July following a 3.5%
increase on the year in June. New registrations are still well below
their pre-financial crisis levels but have shown steady, if modest,
growth so far this year.

Recent UK motor manufacturing output data have shown very sharp
rises on the year but these have been distorted by base effects, with
motor manufacturing in 2011 hit by supply disruption due to the Japanese
tsunami. Registrations, instead, have painted a picture of modest growth
in demand.

“New car registrations rose 9.3% in July, continuing the upward
trend seen during recent months. SMMT’s full year forecast is for 1.97
million cars to be registered during 2012 suggesting a slight slowing of
demand in the second half of the year,” SMMT Chief Executive Paul
Everitt said.

–London newsroom: 44207 862 7492; ukeditorial@marketnews.com

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

Stops tripped through 1.2350 and we’ve been as low as 1.2345 so far.

Reports of BIS buying interest circa 1.2350 is helping slow, but not stop,  the decline.

UK DATA: UK July car registrations +9.3 y/y: SMMT

Just wait till we win a few more medals….

Bids around the 1.5600 level are getting filled, but there’s some tech support around the 1.5584 which holds the 55 day MA.

Sell stops are now touted below on a break of 1.5580 and again through 1.5550

GBP/USD’s trading around day’s lows of 1.5590

Down at 1.2367 from the 1.2390 which greeted me, having been as low as 1.2352 after sell stops tripped through 1.2370.

Dutch bank, thought to be acting on behalf of SNB, notable seller this morning apparently.

More sell stops seen through 1.2350.

EUR/USD sits at 1.2358. The last poll saw it’s 1.2300 topside parameter blown out Friday.

What’ll we see first now,  1.2250 or 1.2450?

Reasoning/s for choice appreciated, but not obligatory.

–Down 0.6% M/M; Down 0.6% 3M Y/Y; Underlying Trend Now Static

LONDON (MNI) – UK house prices were down on both the month and the
year in July, according to the latest House Price Index from Halifax.

The data from Halifax show prices fell 0.6% on the month and 0.6%
on the year.

House prices in the three months to July were unchanged from the
preceding three months. This represented an improvement on the previous
month when this measure of the underlying trend reported a fall of
-0.3%.

Commenting on the data, Martin Ellis, housing economist, said:

“At a national level, house prices have been very stable over the
past year or so. This can largely be explained by the static nature of
supply and demand conditions during this period. Looking forward, we
expect little change in prices over the remainder of 2012 so long as the
economic climate in the UK does not worsen substantially.”

The results are in line with the UK’s other leading house price
survey which showed prices down 0.7% on the month in July and down 2.6%
from the same month a year ago.

–London newsroom: 44207 862 7492; ukeditorial@marketnews.com

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

Pretty close to Reuters median poll of -0.5%.

Index -0.6% y/y in 3 months to July, in line with Reuter’s median forecast.

A quiet start to the week with NSW on holiday, but AUD’s looking fairly well underpinned  and just off levels not seen since May. Market focus will largely be on tomorrow’s RBA rate announcement and although no change in the cash rate is forecast, the minutes may prompt some future clues to a possible rate cut if inflation and the employment market fails to pick up.

Will also be worthwhile keeping an eye on China for any possible RRR cut, (Xinhua news were hinting at one )

AUD’s currently sitting just off o/n highs around 1.0578 and there are offers at 1.0580/00 ahead of a 1.0600 barrier with likely buy stops above. Bids start from 1.0540 and trail down to 1.0500, with sell stops seen on a break .

EUR/USD:  Bids 1.2370/80, sell stops below there and more through 1.2350. Offers 1.2430/50 (talk of supranational offers, SNB related Dutch name and ACB offers) buy stops above. Also talk of option barriers 1.2450 and 1.2500.

GBP/USD:  Offers 1.5640/50 and 1.5690/00 ahead of tech res 1.5730/35 (1.5731 200 day MA).  Bids 1.5600/10, tech support 1.5580/85 ( 1.5584 -55 day MA)

EUR/GBP: Offers 0.7945/50 and tech res 0.7965/70 (55 dayMA-0.7970), Bids 0.7900/10, sell stop just below.

USD/JPY:  Bids 78.20/30(importers) larger 77.90/78.10 (suggested semi official), large  sell stops through 77.90 and 77.50. Offers 78.80/00 (exporters) some buy stops mixed in through 78.85, buy stops also through 79.00 just ahead of tech res at 55/200 day MA's at 79.14/17

EUR/JPY: Bids 97.00/10 sell stops below ahead of bids 96.50/60. Offers 97.70/80

AUD/JPY:  Bids 82.70/80, sell stops down through 82.50. Offers 83.15/20

EUR/CHF: Bids 1.2000/10(SNB), Offers 1.2025/30 buy stops through 1.2035 and through 1.2050

USD/CHF: Tech supp 0.9630/35 and 0.9600/10. Offers 0.9705/15 and 0.9760/70

AUD/USD:   Offers 1.0580/00,(1.0600 barrier) Bids 1.0530/40 and 1.0500/10, sell stops through 1.0500

EUR/AUD:  Offers 1.1770/80 and 1.1845/55, likely buy stops above. Bids 1.1720/30 and 1.1650/60

NZD/USD:  Offers 0.8190/00 ahead of possible barrier (0.8200), bids 0.8170/75, 0.8120/25

USD/CAD:  Bids 0.9980/90. Offers 1.0020/30, tech res 1.0075/85, and 1.0095/10 (100/200 day MA's 1.0096/1.0108)

Christian Democrats Volker Kauder says Weidmann’s opposition to sovereign bond purchases by the ECB has the support of Merkel’s party.

Speaking on German radio, Kauder said “It’s good that Weidmann took that position” adding “There always has to be a sensible one who prevents matters getting out of hand.”

-Originally Transmitted on Sunday at 22:00 EST

FRANKFURT (MNI) – The European Central Bank will not allow fears
regarding the euro’s permanence to push up yields on sovereign debt,
Executive Board member Benoit Coeure said in an interview released on
Monday.

Coeure told Slovakian daily Hospodarske Noviny in the same words
used last Thursday by ECB President Mario Draghi that the euro is here
to stay and that if monetary authorities buy government debt, then only
if certain conditions are met and in sufficient amounts to accomplish
its mission.

“At its meeting on 2 August, the Governing Council has made it
clear that it will not accept higher sovereign bond yields due to fears
of the reversibility of the euro,” he said. “The euro is irreversible.”

It is up to governments to activate the bailout fund in the bond
market and impose conditionality on those member states recurring to the
fund, he said.

“Within its mandate to maintain price stability, and in strict
independence, the ECB may then undertake sovereign bond purchases,” he
said. “Such operations will be of a size adequate to reach our
objective. The Governing Council may also consider undertaking further
non-standard monetary policy measures. Over the coming weeks, we will
design and communicate the appropriate modalities.”

Coeure denied any “specific need” for global central banks to act
in concert. He also rejected the idea that the ECB would tolerate higher
inflation for the sake of more economic growth.

“In an already highly uncertain environment, why should we
introduce another element of uncertainty?,” he asked rhetorically. “This
would only be harmful to the purchasing power of European citizens. Our
aim is to ensure price stability and keep inflation in the euro area
below but close to 2% over the medium term. We have done so in the past
and we will do it in the future.”

The two three-year long-term refinancing operations conducted by
the ECB were “very successful in addressing risks to the funding of euro
area banks,” Coeure affirmed. Their full impact, however, will come
“only when the economy recovers.”

Aiming ECB funding operations more closely at the real economy and
in particular small and medium-sized enterprises warrants “further
thoughts,” he said.

The ECB is not considering any further steps with regard to
deposits at banks in Greece and Spain, Coeure said, calling these
deposits “currently stable” and noting that any financially sound
Eurozone bank with appropriate collateral can get ECB liquidity.

A sound banking sector in Europe won’t be achieved if all banks are
saved, he said: “Insolvent institutions should be resolved, and any
European support to a national banking system should come with strong
control, independent valuation of assets and liabilities, and adequate
loss-sharing to protect taxpayer money.”

–Frankfurt bureau tel: +49-69-720-142. Email: dbarwick@marketnews.com

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

-Originally transmitted on Sunday at 18:05 EST

ROME (MNI) – In the coming weeks, the European Central Bank will
ready the policy instruments in its toolbox for application and could
cut interest rates further, Governing Council member Ignazio Visco said
in an interview published Sunday.

“The economy is deteriorating everywhere in the world,” the
governor of the Bank of Italy told Italian daily La Repubblica. “We are
in a phase where the prospects for recession persist and the slump in
manufacturing activity is intensifying, not only in the Eurozone but
also in other advanced economies as well as in emerging economies.”

“In this scenario of continual slowdown, more accommodative
monetary policy can be expected in the next months,” he said.

Visco explained the initial negative reaction of markets to the
policy “design” outlined Thursday by ECB President Mario Draghi as a
“misunderstanding” and predicted that concrete responses to still open
questions would be ready by September.

“Fundamentally, financial actors want two things: they want to know
how the ECB will intervene – not only in the open market to guarantee
liquidity for the system and the private sector – and they want to know
when the instruments will be operational,” he explained. “The answer to
the first question has arrived. Now the answer to the second must
arrive. From this point of view, I expect close collaboration between
the Eurogroup and the ECB between now and September.”

August must not be a month of vacation, neither for institutions
like the ECB nor for Eurozone governments – “those under attack and the
more virtuous ones,” Visco insisted. “It must be confirmed, with
concrete acts, that no one questions the irreversibility of the euro,
the process of consolidation of public finances and action to support
economic growth.”

Asked specifically about the ECB’s bond-buying program SMP, a new
long-term refinancing operation and a reduction in collateral for access
to ECB liquidity, Visco replied, “These instruments are all at our
disposal now. They must be prepared on a technical basis, and that is
the work our economists are already doing and should finish in August.”

“But the die is cast: the ECB will have all the firepower to
intervene,” he continued. “And, as has been said, with resources that
will be absolutely adequate.”

Visco conceded that the bailout funds, the European Financial
Stability Facility and the future European Stability Mechanism, still
have “limited resources and perhaps not enough. But the political
signal is there, and it applies to all countries, starting with
Germany.”

The central banker dismissed the notion that Germany was exercising
a kind of veto until its constitutional court has passed a ruling on the
ESM. He noted that there had been no formal vote on the Governing
Council on Draghi’s design and that Bundesbank President Jens Weidmann
had merely expressed in the discussion his “perplexity” over purchases
of government debt in secondary markets.

“My view is that if government bonds are purchased to finance
sovereign debt, then the Bundesbank is right,” Visco said. “But if this
is done to restore the monetary policy transmission mechanism, then it
is entirely within the mandate of the Treaties. And this was the
collegial conclusion of the ECB’s Governing Council.”

The idea that governments which seek the ECB’s assistance should
submit their fiscal policy for approval is “completely logical,” he
argued. “The Eurosystem does not want to waste its ammunition without
precise guarantees. Residents sharing a house must respect its rules and
accept a limitation of their own sovereignty in the common interest of
the house.”

Turning to Italy, Visco said that while important progress on
reforms had been made and that credibility was on the mend, the crisis
had intensified of late. “Unfortunately we will have very weak growth in
2013 as well.”

Still, there appears no need for assistance from bailout funds “at
the moment”, he argued. In the future, “if markets are convinced that a
page has been turned, if Italy does not abandon the discipline on public
finances and reinforces its commitment to correct the factors that
prevent the country from growing, then there will be no need of
intervention by a fund.”

“Much depends on us,” Visco said.

–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com

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

-Originally Transmitted on Sunday at 18:05 ET

BERLIN (MNI) – Italian Prime Minister Mario Monti in a newspaper
interview published Sunday reaffirmed that Italy does not plan to seek
financial aid from its Eurozone peers.

“If all works as planned, I’ll stay in office until April 2013, and
I hope that I can rescue Italy from financial ruin by then with moral
support from some European friends, especially Germany,” Monti told the
German weekly Der Spiegel.

“But I say very clearly: moral support, not financial,” the prime
minister stressed.

Monti said he believed that a break-up of the Eurozone can still be
prevented. He warned, though, that the tensions created by the debt
crisis “bear the traits of a psychological dissolution of Europe.”

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

[TOPICS: M$I$$$,M$X$$$,MT$$$$,M$$CR$,MFX$$$,MGX$$$]

–Originally transmitted at 18:05 EST Sunday

FRANKFURT (MNI) – The Euro is irreversible, and any doubts in the
markets about whether countries will remain in the currency bloc must be
fundamentally dealt with, European Central Bank Executive Board member
Peter Praet said in an interview with Belgian newspaper De Standaard
published Saturday.

Praet said European policy-makers were headed in the right
direction but may be moving too slowly for markets. The situation
remains “very serious” and it is up to governments rather than the ECB
to act: “Our monetary support gives the politicians time. That time must
now urgently be put to good use.”

Praet told the paper that the Eurozone had entered a critical
phase: “Everything is starting to play a part: emotions, politics,
cultural differences and even irrational reflexes.”

“There is a sort of fear that has seeped into the financial markets
that some countries in the euro will leave and return to their own
currency. This is unacceptable and must be dealt with in a fundamental
way,” he added.

Praet said both institutional weaknesses in the Eurozone as a whole
and problems in individual countries were still playing a role in the
crisis. While the institutional path laid out by EU Council President
Herman Van Rompuy sent a “strong signal” and goes in the right
direction, “the problem is that for the markets it is moving much too
slowly. There is no clear timeline.”

Praet said the crisis had laid bare fiscal problems in many
individual Eurozone countries that must be tackled simultaneously with
institutional issues.

“Because of the crisis, countries like Italy, France and Belgium
have lost 10 years time to bring their finances in order. All problems
must now be tackled at the same time. There is no margin for error
anymore.”

Praet said Belgium had done “relatively well” in the crisis and
succeeded in winning back the trust of markets but remained “vulnerable”
as market sentiment can change quickly.

Praet would not discuss ECB President Mario Draghi’s remarks
recently in London or the decisions taken Thursday with the paper,
calling them “too sensitive.”

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

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