Euro in Danger on German IFO But S&P 500 Futures Warn of Risk Rebound

Euro in danger, as the low threat by German IFO business climate index than 2 years
Follow S & P 500 index futures Risky Assets Recovery May this weekend
Finance Ministers of the EU could provide clues to the next series of measures against the crisis
The German IFO business confidence gauge has top billing on the economic calendar in European hours. Expectations of the owner of the business climate for the month falling to the right call, on 2 June and reached its lowest level in 27 months. In the short-term studies suggest that the correlation of interest rate expectations are increasingly fought trends in risk appetite, as the main driver of price action of the euro. This suggests that signs of a deep recession is likely to build on the single currency as the expectations of the ECB's weigh-acceleration.
The result can be negative for the sentiment, in general, taking into account a weakening of the currency headwind of the largest bloc of global production this year to punish people FX is used, including Dollar Australia and New Zealand. Against this background, S & P 500 stock futures are showing cautious higher in late electronic trading in Asia, and warned that profit-taking, the price action at the end of the support of weeks of negotiations and take high-risk assets, despite the negative news .
Meanwhile Ministerscontinue the EU funds a two-day meeting in Brussels. Coming on the heels of the G20 summit earlier this week, where officials of the pressure, which included the region of serious world leaders to step up efforts to the debt crisis, the sit-down to view the emergence of some preliminary policy ideas. Specific initiatives are likely to wait until the summit of European leaders next week, but traders still continue to pay particular attention to comments from the sideline to pay the original indices.
The dollar was little changed against major currencies in consolidated trading overnight as the currency markets after a major outbreak of risk aversion in the last 24 hours. The dollar rose yesterday by 1.2 percent, as fears grew of global economic growth, according to the sign of the deepening of China's weakness, the euro area and the U.S. as part of the hopes for the promotion of the Federal Reserve to leave. Ben Bernanke, and the company decided to expand its quantitative easing at a meeting of the FOMC rate decision to suspend committee earlier this week. Moody's decision to downgrade the credit ratings of 15 of the largest banks in the world reinforces the sober atmosphere.
Asia Session: What Happened
MNI Flash Business Sentiment Survey (JUN)
Credit Card Spending s.a. (MoM) (MAY)
Credit Card Spending (YoY) (MAY)
Euro Session: What to Expect
Italian Consumer Confidence Ind. Sa (JUN)
KOF Institute June Economic Forecast
German IFO - Business Climate (JUN)
German IFO - Current Assessment (JUN)
German IFO - Expectations (JUN)
Critical Levels

Euro German ZEW and Chatter of the g-20 for orientation

19 June 2012 strategist 07: 05 GMT Talking Points
Unlikely to find British pound support sustainable stable CPI result Euro looks like German ZEW, comment of the g-20 leadership indices Dollar sold on corrective figures flows overnight despite Asian Stocks Drop UK CPI are the first to enter the spotlight as Europe is in line with expectations, suggesting the overall inflation rate will remain at 3% in May. While this done little to advance the case for a dove more and more of the Bank of England, it is even unlikely to divert already significant winds on the political front after last week, the unveiling of a new credit-loan program. Although fully operational details are a little murky, speculation that it will be funded with the new creation of liquidity similar to the trigger seems likely to keep the British pound relatively capped for the moment. In this spirit, trends in risk appetite may be more important as a driver of the action of the price in the short term until the releaseofminutes of the future of the June meeting BoE offers more clarity.
In this spirit, the attention turns to the gauge German ZEW investor confidence. Economists forecasts suggest that the overall index will facilitate to 39.0 in June, snapping a two month winning streak and printing at the lowest since March. The forward-looking economic sense should reduce to the lowest since January. The result can be used to remind investors that apart from generating the spectrum of the instability of the financial markets, the fiasco of euro-zone debt represents a significant brake on global growth by the sinking of the economy of the block of money - about a fifth of GDP - global world into recession this year. Such an outcome is likely to revitalize demand for refuge currencies, including the US Dollar and Japanese Yen weighing on the Euro in construction rates ECB reduce expectations.
Negotiations Coalition to power in Greece and secondary commentary from the second day of the meeting of the g-20 summit to the Mexico represent potential wild cards for the feelings of risk and thus the spectrum of major currencies. In Athens, ND leader Antonis Samaras seems to have gained the support of the leader of the Pasok Evangelos Venizelos party, giving the pro-bailout block enough seats in the Parliament, to move forward. At the G20, Euro zone turmoil appears clearly in perspective as a country outside the region step pressure on the EU to put its house in order. It remains to be seen if something emerges after the sitting, but traders will be at least hope some indications before the Summit of the leaders of the more specific EU policy scheduled for the end of next week.
The US Dollar declined against all high counterparts of the page of the overnight, despite a drop of Asian stock markets in that predictable stimulates the demand for the refuge go - to currency. The likely disparity reflects the corrective measures in the price of the greenback and catch-up of sale through Asian exchanges, where shares responded to signals take risks that had already made their way in exchange rates in European of yesterday and we market hours. The dollar added 0.2 per cent average yesterday as the outbreak in the shadow Spanish bond yields a positive mood at the outset in the wake of the election of the Greece weekend, reminding investors that the euro area has still more reasons for concern of sovereign risk.
Asia session: What happened
Minutes of the June of Reserve Bank of Australia meeting
Session of the euro: what to expect
French Production own-Company Outlook (JUN)
French Production Outlook indicator (JUN)
(JUN) business confidence indicator French
Consumer Price Index (YoY) (may)
Consumer Price Index (MoM) (may)
Consumer Price Index (YoY) basis (may)
(MoM) retail price index (may)
Retail price index (YoY) (may)
IPD Ex death int. payments (YoY) (may)
Price of the House of the DCLG UK (YoY) (APR)
German ZEW Survey (current Situation) (JUN)
German ZEW Survey (Econ. sense) (JUN)
Eurozone ZEW Survey (Econ. sense) (JUN)
Exit from the eurozone Construction w.d.a. (YoY) (APR)
Exit eurozone Construction s.a. (MoM) (APR)
Critical levels

Euro Weakens Intraday after Data Shows Drop in German Industrial Production

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By David Schutz, 06 June 2012 10:26 GMT THE TAKEAWAY: German industrial production weakened in May -> Euro well bid on the day but weakens after data

German industrial production fell more than expected in April, the German stats bureau said today. The data added to fears that growth in Europe’s largest economy is slowing as the far-reaching credit crisis curbs demand and consumer confidence. Production fell 2.2% on the month versus the expected 1% drop. The number was -0.7 weaker than April 2011.

Germany has remained the region’s strongest economy since the onset of the crisis, recently posting Q1 economic growth of 0.5% which helped the Euro-area avoid recession. Today’s numbers increased fears that that economic woes will catch up with Germany, which has thus far benefitted from low unemployment and increased exports to emerging markets.

The Euro remained well bid on the day, but suffered from the weak German numbers intraday. Fears of political instability have driven the single currency down since the beginning of May.

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06 June 2012 10:26 GMT

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!!!Drop in German Factory Orders Points of economic Contraction Possible

5 June 2012 08: 51 GMT the takeaway: German factory orders decline of 1.9% in the month of April-> several indicators of possible contraction-> Euro cancels the previous session gains
Reference to a possible reversal to an economic contraction, commands dragged German plant-1.9% in the course of April, well below the expectations of analysts for a - 1.1% decline. From the month of April 2011, factory orders were down 3.8% and March it had arrested were revised and more for an increase of 3.2%, according to the Ministry of economy in Berlin.
Factory orders from other countries of the euro area dropped 1.8% in April, while orders from non - EU countries fell by 4.7%. During this time, domestic orders were up by 0.4%.
Earlier today, composite outcome of German Index of purchasing managers of May is the lowest 34 months and indicates a contraction of the German production. The decline suggests that anxiety over the European debt crisis is now pressure on the German economy, and GDP T2 could come down.
It is said that G7 leaders are meeting today to discuss ways to improve the European economy and to help the Greece to avoid output of the single currency. German Prime Minister Angela Merkel said so far that it does support joint Government in euro bonds.

The EUR/USD appeared to ignore the worst decline expected in the commands of the plant, as the slightly higher fixed pair follows a giant lower 1.2450 earlier in the session. Feelings of risk are down after the Spanish Minister of the Budget of the negative comments on a rescue plan and the rumours that the G7 leaders will participate in a conference call.
DailyFX provides news forex and technical analysis on trends affecting the world market currencies.
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5 June 2012 08: 51 GMT

? Euro Stays Down after Softer German Inflation

THE TAKEAWAY: German CPI eased in May -> Pullback caused by reduction of energy prices -> Euro weak on the day
German May inflation numbers came in softer than expected, fueled by a decline in energy prices. The yearly consumer price index in Europe’s largest economy eased to 2.1% from 2.2% in April, which was also the expected number for May. Inflation fell 0.3% on the month.
The relief in inflation pressures was attributed to a drop in oil prices as political tensions in the Persian Gulf show signs of easing. Speculation that Greece will exit the Euro region continues to curb consumer spending from companies and households, although record low unemployment rates in Germany have contributed to rising demand.


The Euro remained weak on the day after the German CPI release. The single currency has fallen sharply against the Greenback and Yen over recent weeks as instability in Greece threatens its security. Markets remained poised to absorb upcoming US consumer confidence numbers later on Tuesday.

:: German Consumers Not Worried About a Greek Exit

25 may 2012 06: 37 GMT the takeaway: Gfk consumer confidence survey comes to 5.7 for June, is revised investigation more than 5.7-> report said German are encouraged by the growth of the economy-> EURUSD not moving much in today's meeting
German consumers are not concerned about the Greece.
It was the message of the investigation of June entered 5.7, Gfk consumer confidence in remaining regular inquiry may, revised more than 5.7. Analysts anticipated upcoming June 5.6 level, which was the initial result of survey last month.
The report by Gfk, stated that consumers are "much more optimistic" and their willingness to spend has also increased. However, expectations of revenue decreased slightly. The survey is based on interviews conducted by GFK with 2,000 consumers.
The report suggests that German consumers see the growth of the economy in the first quarter of this year as a rebound from slump from fourth quarter last year, and consumers are not concerned by the debt crisis euro affecting the Germany.
Report of positive consumer confidence of today follows the worse than expected confidence of German enterprises in may according to IFO yesterday. Despite the expansion of the Q1, businesses are concerned about the financial consequences of a Greek exit from the euro zone. Markit economics also announced yesterday that the German industrial production was measured at its lowest point since June 2009, while the managers of producer services index was higher for the month of May.
Despite the negative economic outlook of yesterday, the consumer confidence is in line with the forecasts of the European Commission of 0.7% expansion in Germany in 2012, contrary to a negative in all of the forecasts for the economy of the euro area.

Despite the German confidence stable, EURUSD has fallen down of 1.2517 today, back to the previous level before the report. Since yesterday afternoon, the couple did not moved much following a fall early in the morning to new lows of 2 years.
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25 May 2012 06: 37 GMT

€ Euro weak near 2-yr lows on dire German data

* Euro falls after German manufacturing PMI, Ifo surveys
* Concerns of potential Greek exit add to bearish outlook
* Break below $1.25 could see move towards 2010 low
By Nia Williams
LONDON, May 24 (Reuters) - The euro hit a near two-year low against the dollar on Thursday after dire German economic data suggested no country in the region was immune from crisis, alarming investors already fretting over the risk that Greece will leave the euro zone.
A weaker-than-expected Ifo business climate index and manufacturing PMI data for May suggested growth in Europe's largest economy that has helped the currency bloc dodge recession may be starting to slow.
Signs of a downturn across the region, banking sector problems in Spain and the risk of contagion ensnaring bigger economies are all combining to keep euro bears firmly in control, with some investors targeting $1.20 in coming weeks.
The euro dropped sharply to $1.25155 on trading platform EBS, its lowest level since July 2010, before recovering to trade at $1.2575 as some investors booked profits on bearish positions initiated earlier. But any rebound was likely to be fleeting and draw more sellers.
Traders reported an options barrier at $1.2500 with more stop-loss orders cited at $1.2480.
The euro has lost 1.4 percent against the dollar so far this week with sentiment already fragile after a European Union leaders summit on Wednesday failed to shed new light on how they might tackle the euro zone debt crisis.
"After the (EU) summit without any results we have still got a lot of uncertainty in Greece. The last thing we need in this situation is the German economy getting into trouble," said Lutz Karpowitz, currency strategist at Commerzbank.
"There are a lot of short positions so there is always a possibility of a retracement in the euro but that does not change the overall (weaker) trend."
Real money investors and macro funds have stepped up selling of the euro in recent days as concerns Greece might quit the euro zone intensify. Fears of a Greek exit have mounted after an inconclusive election this month left the country on the path to bankruptcy and raised the risk of contagion.
Three officials told Reuters on Wednesday that members of the currency bloc have been told to prepare contingency plans in case Greece quits the euro, an eventuality that the German central bank said would be testing, but "manageable".
Greeks will vote again on June 17, with polls showing a neck-to-neck race between parties which support and those which oppose the terms of the country's international bailout keeping markets on edge.
"All roads lead to a lower euro and our forecast is euro should be at $1.15 by the end of the third quarter," said Tom Levinson, currency strategist at ING.
"It still makes sense to go short at these levels, given the high level of uncertainty about Greece. While short positions are quite high and there is a possibility of a squeeze which could see the euro higher, any rebound is a sell on rallies."
BROAD DOLLAR STRENGTH
European Central Bank data showed 35.4 billion euros of net direct portfolio investment flowed out of the euro zone in March, suggesting investors are starting to shun the region's assets.
The poor German economic data led more investors to the safety of the dollar and the yen. The euro was down 0.15 percent against the yen at 99.852, having fallen to 99.37 yen, its lowest level since February 1.
The dollar index climbed to a 20-month high of 82.362, while the greenback rose to a 15-month peak versus the Swiss franc of 0.95959 francs on trading platform EBS.
Against the yen, the greenback was steady at 79.38 yen , showing limited reaction after Bank of Japan governor Masaaki Shirakawa said the central bank was resolved to maintain its ultra-loose monetary policy but would not ease solely to weaken the yen.
Earlier in the session, data showing that China's factories faltered in May had limited impact on major currencies, as market players had been expecting a weak reading.

EU Market Update: Major European PMI Manufacturing data misses expectations; German IFO Business Confidence falls for the first time in 7 months

Thursday, May 24, 2012 5:41:17 AM TradeTheNews.com EU Market Update: Major European PMI Manufacturing data misses expectations; German IFO Business Confidence falls for the first time in 7 months***Economic Data***
- (RU) Russia Gold & Forex Reserve w/e May 18th: $514.3B v $518.8B prior
- (DE) Germany Q1 Final GDP Q/Q: 0.5% v 0.5%e; Y/Y: 1.7% v 1.7%e; GDP WDA Y/Y: 1.2% v 1.2%e
- (DE) Germany Q1 Private Consumption: 0.4% v 0.2%e; Government Spending: 0.2% v 0.3%e; Domestic Demand: -0.3% v 0.0%e; Capital Investment: -1.1% v -0.3%e; Construction Investment: -1.3% v -0.4%e; Exports: 1.7% v 0.9%e; Imports: 0.0% v 0.3%e
- (CH) Swiss Apr Trade Balance (CHG): 1.3B v 1.9Be; Real Exports M/M: -0.9% v +0.2%e; Real Imports M/M: 2.6% v 5.9% prior
- (FI) Finland Apr PPI M/M: -0.1% v +0.4% prior; Y/Y: 1.4% v 1.4% prior
- (FI) Finland Apr Preliminary Retail Sales Volume Y/Y: -2.0% v +5.3% prior
- (FR) France May Business Confidence: 93 v 94e; Production Outlook: -29 v -14 prior; Own-Company Production Outlook: -4 v -4 prior
- (FR) France May Preliminary PMI Manufacturing: 44.4 v 47.0e; PMI Services: 45.2 v 45.7e
- (CZ) Czech May Business Confidence: 6.0 v 7.5 prior; Consumer Confidence: -31.0 v -29.3 prior; Composite: -1.4 v +0.2 prior
- (HU) Hungary Mar Retail Trade Y/Y: +0.9% v -0.8%e
- (ES) Spain Mar Mortgages-capital loaned Y/Y: -41.5% v -49.6% prior; Mortgages on Houses Y/Y: -42.0 v -47.1% prior
- (DE) Germany May Advanced PMI Manufacturing: 45.0 v 47.0e (fastest rate of contraction since June 2009); PMI Services: 52.2 v 52.0e
- (NL) Netherlands Apr Unemployment Rate: 6.2 v 5.9% prior
- (NL) Netherlands May Producer Confidence: -5.0 v -3.3 prior
- (EU) Euro Zone May Advanced PMI Manufacturing: 45.0 v 46.0e (lowest reading since June 2009); PMI Services: 46.5 v 46.7e; PMI Composite: 45.9 v 46.6e
- (DE) Germany May IFO Business Climate: 106.9 v 109.4e (first MoM decline in 7 months); Current Assessment: 113.3 v 117.1e; Expectations Survey: 100.9 v 102.0e
- (UK) Q1 Preliminary GDP (Second reading) Q/Q: -0.3% v -0.2%e; Y/Y: -0.1% v 0.0%e
- (UK) Q1 Preliminary Private Consumption: 0.1% v 0.3%e; Government Spending: 1.6% v 0.0%e; Gross Fixed Capital Formation: -0.3% v -0.5%e; Exports: +0.1% v -0.3%e; Imports: 0.4% v 0.1%e
- (UK) Q1 Preliminary Total Business Investment Q/Q: +3.6% v -1.0%e; Y/Y: 14.2% v 9.2%e
- (UK) Mar Index of Services M/M: 0.5% v 0.3%e; 3M/3M: 0.1% v 0.2%e
- (UK) Apr BBA Loans for House Purchase: 32.4K v 32.0Ke
- (HK) Hong Kong Apr Trade Balance (HKD): -42.9B v -40.8Be; Exports Y/Y: 5.6% v 6.2%e; Imports Y/Y: 5.0% v 4.1%e
- (IC) Iceland May CPI M/M: 0.0% v 0.8% prior; Y/Y: 5.4% v 6.4% prior
Fixed Income
- (DK) Denmark sold approx DKK6.0B in I/L 2023 Bonds; Yield -0.14%, bid-to-cover: 1.78x
- (HU) Hungary Debt Agency (AKK) sold HUF50B v HUF45B indicated in 12-Month Bills; Avg yield 7.58% v 7.38% prior; Bid-to-cover: 1.81x v 2.12x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- China May HSBC Flash Manufacturing PMI registers its 7th consecutive contraction
- Major European PMI Manufacturing miss market expectations
- German IFO falls for the first time in 7 months
- UK Q1 GDP second reading revised slightly lower
- Speculation rising of a EU wide deposit guarantee plan to be endorsed by German Chancellor Merkel
- EU growth initiatives will be announced in June, but without abandoning fiscal prudence
***Equities*** >Indices: FTSE 100 +0.80% at 5306, DAX +0.30% at 6301, CAC-40 +0.60% at 3021, IBEX-35 +0.60% at 6481, FTSE MIB +0.75% at 13,057, SMI +0.40% at 5841
- In Europe, equities opened the session broadly higher amid gains in banks. However, markets have since pared gains following the release of weaker than expected EU manufacturing PMI and German IFO data. Additionally, the decline in China's May flash manufacturing PMI has weighed on markets. In terms of upcoming event risks, durable goods and weekly jobless claims data are due out of the US later today. Also, commentary is expected later today from the German Finance Minister Schaeuble, ECB's Prsident Draghi, Fed official Dudley and ECB/Bundesbank official Asmussen.
- In the UK shares of Mothercare [MTC.UK] and Cable & Wireless Communications [CWC.UK] have both traded sharply higher after releasing their respective full year earnings reports. Additionally, Thomas Cook [TCG.UK] has gained more than 5%, after naming a new CEO. SABMiller [SAB.UK] has moved between slight gains and losses, following the release of its full year earnings report. In Spain, Bankia is trading lower by approx. 1%, as Spain's government said the firm will require about ?7.1B to comply with the country's provisioning rules. Austrian bank, Raiffeisen [RIBH.AT] has gained over 1% after reporting higher than expected Q1 earnings. In Germany, sharers of SAP [SAP.DE] and Metro [MEO.DE] have been weighed down by ex-dividend factors. Bayer [BAYN.DE] has lost approx. 1.5%, as a US FDA panel voted against recommending XARELTO as a treatment for acute coronary syndrome.
Speakers: >- German IFO Economists commented that uncertainty in Euro Zone was impacting Germany's economy, but outlook remained above its long-term avg
- ECB's Nowotny: ECB has not used its whole arsenal and reiterated that non-standard ECB measures should not endanger mid-term price stability. The situation in Greece was particularly acute and overcoming imbalances was essential but would take time
- Bank of Japan (BOJ) Monthly Economic Report maintained its overall assessment of the economy that it would return to moderate recovery path
- Japan BOJ Gov Shirakawa commented ion Parliament that distrust in fiscal reform could push up long-term interest rates and weigh upon earnings of financial companies. He reiterated view that BOJ would pursue powerful easing. Risk aversion was the biggest factor in recent FX price movements. He added that there was no clear correlation historically between monetary base and JPY currency movement. The BOJ would strive to beat deflation using current asset buying program
- IMF China representative stated that a Greek exit from EMU would be a big shock to Chinese exports but China has fiscal room to sustain growth in the face of crisis
- BoE official Bailey stated that the UK banking sector's contingency plan for potential Greek exit from euro becoming more detailed
- Finland Fin Min Urpilainen commented that Europe's challenge was to find economic growth. Collateral payment from Greece rose to ?560M
- Ireland Dep PM Gilmore stated that categorically treaty would not be changed and reiterated the view that it wanted Greece to stay inside the EMU. Lastly he added that Ireland did not have contingency plan for a Greek exit.
- Sweden FSA's Cerps stated that the agency was monitoring banking sector to USD funding as Euro crisis deepens
- Poland Dep Fin Min Radziwill commented that the PLN currency was relatively stable with its weakness related to the Euro crisis. Poland currency sales would be similar to 2011 levels. He noted that debt markets were difficult at this time but would return to the market after it stabilizes as the country is in a comfortable situation. Domestic sales were seen covering most remaining needs for 2012
- Hong Kong Chief Executive Leung stated that it would seek stronger economic growth by diversification
- India Finance Ministry Official noted that the Gov't committee to meet on Friday to discuss raising diesel prices
- Philippines Central Bank Assistant Gov Amador commented that it would review CPI forecasts at June policy meeting and saw Inflation at a manageable as lower oil costs dampened pressures. To consider global economy and Euro Zone crisis during policy meeting and added the central bank would moderate sharp volatility in FX rates
- Indonesia Finance Ministry unveiled its mineral export tax regulation
- Iran official stated that there was no basis for new round of UN Counsel (P5+1) discussions
Currencies:
- The Euro initially tried to correct oversold levels but risk aversion sentiment again maintained the upper hand throughout the bulk of the European morning. Following China's lead, the European major PMI Manufacturing data came in softer than expectations and provided further headwinds for the Euro. Citigroup analyst added to sentiment when it issued a note forecasting ECB refi rate being cut to 0.50% and the central bank to resume its 3-year lending LTRO following any Greek exit from EMU. The EUR/USD approached the 1.2500 level for 22-month lows which provided some technical and psychological support. One analyst noted that 1.2530 level was 78.6% retracement of its 2010-2011 move.
-The hour ahead of the NY morning the markets encountered a bit of a reversal as European equity markets moved back into positive territory and peripheral spreads narrowed. The record low yields of safe-haven plays seemed to have ignited some asset reallocation back into equities. The EUR/USD was back around the 1.2560 area as the NY morning approached
- The EUR/CHF cross floor at 1.200 continued to note a 'massive' bid in its defense.
Political/ In the Papers:
- The Spanish government was said to be planning to nationalize CatalunyaCaixa and NovaGalicia banks due to the inability to find a buyer. Prior reports from late March suggested that the auction process for the banks would be slowed by Spain's government, as Spain's Deposit Guarantee Fund (DGF) needed to be strengthened. At that time it was estimated that the DGF had about ?2.0B in funds.
- Plans by the government to delay certain privatizations related to the energy industry have weighed on Russia's equity markets. On Wednesday, Russia's benchmark RTS index declined by 4.4%.
- The Telegraph's Ambrose Evans-Pritchard is critical of former Greek caretaker PM Papademos. He argued If Greece were to leave the Euro, then its fate would not have to be as dire as the situation recently described by Papademos. It could restructure its economy in a similar manner to Iceland.
- According to the FT US manufacturers argued against plans by JP Morgan to launch an exchange traded fund backed by copper as it would grossly and artificially inflate prices, and cause wreak havoc on the global economy.
***Looking Ahead*** >- (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to leave interest rates unchanged at 5.50%
- (AR Argentina May Consumer Confidence:
- 6:00 (IR) Ireland Apr Property Prices M/M: No est v 0.0% prior; Y/Y: No est v -16.2%e
- 6:00 (CZ) Czech Republic to sell 9-month Bills
- 7:15 (UK) BOE member Miles
- 7:30 (DE) German Fin Min Schaeuble
- 7:30 (TR) Turkey May Industrial Confidence: No est v 116 prior; Capacity Utilization: No est v 74.7% prior
- 8:00 (ZA) South Africa Central Bank Gov Marcus Rate Decision press conference
- 8:00 (BR) Brazil Apr Unemployment Rate: 6.2%e v 6.2% prior
- 8:00 (RO) Romania to sell RON500M in Bonds
- 8:30 (US) Apr Durable Goods Orders: +0.2%e v -4.0% prior (revised from -4.20%); Durables Ex Transportation: +0.8%e v -0.8% prior (revised from -1.1%); Capital Goods Orders Non-defense Ex-Aircraft: 0.8%e v -0.8% prior; Capital Goods Shipment Non-defense Ex-Aircraft: -1.0%e v +2.6% prior
- 8:30 (US) Initial Jobless Claims: 370Ke v 370K prior; Continuing Claims: 3.250Me v 3.265M prior
- 8:58 (US) May Preliminary Markit PMI:
- 9:00 (IT) Italy PM Monti
- 9:00 (EU) ECB's Draghi, Bank of Italy's Visco speak at Rome Conference
- 9:00 (DE) German Chancellor Merkel speaks at German Engineering Industry Convention
- 9:00 (BE) Belgium May Business Confidence: -11e v -10.7 prior
- 9:00 (MX) Mexico Q1 GDP Y/Y: No est v 11.0% prior
- 9:30 (DE) Germany Econ Min Roesler
- 9:30 (US) Fed's Dudley to speak on Regional Economy in New York
- 9:30 (EU) EFSF CFO Frankel in Rome
- 9:30 (BR) Brazil Apr Current Account: -$4.0Be v -$3.3B prior; Foreign Direct Investment (FDI): $4.9Be v $5.9B prior
- 9:30 (US) Commercial Paper data
- 10:30 (US) EIA Natural Gas Inventories
- 11:00 (US) May Kansas City Fed Manufacturing Activity: 5 v 3 prior
- 12:20 (DE) ECB member Asmussen in Poland
- 15:00 (AR) Argentina Apr Industrial Production M/M: No est v 1.9% prior; Y/Y: 1.5%e v 2.1% prior
- 19:30 (JP) Japan Apr National CPI Y/Y: No est v 0.5% prior; Ex-Food Y/Y: No est v -0.5% prior
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€ Euro, risky look at the PMI in the euro area and the German IFO for branch

24 May 2012 07:05 GMT  Talking Points
Euro, Risky Assets Look to Eurozone PMI and German IFO for Direction German, UK GDP Reports Unlikely to Stir Volatility Absent Large Revisions S&P 500 Stock Index Futures Point Lower, Hinting at Lingering Jitters The major currencies consolidated in quiet overnight trade as markets digested volatility over the preceding 24 hours before a busy day of European economic data offers new catalysts. The preliminary set of May’s Eurozone PMI figures is in focus. Region-wide metrics are expected to show the manufacturing and services sectors shrank for the fourth consecutive month, with the pace of contractions slightly accelerating from April. Separately, the German IFO business confidence survey is forecast to show sentiment soured in May after printing flat in the prior month.
Markets will look to the outcomes to gauge the degree of regional slowdown, establishing the extent to which it can sabotage deficit-reduction efforts and amplify credit-market stress. After yesterday’s lackluster EU leaders’ summit – which delivered little besides showing surface-level support for keeping Greece within the Eurozone and exposing familiar disagreement on jointly-issued “Eurobonds” – the outcomes may prove decisive in setting the trajectory of the Euro as well as risk-linked currencies until the second Greek election in mid-June.
Elsewhere on the docket, updated first-quarter German GDP numbers are also on tap, with the by-component breakdown due to be unveiled. The report seems likely to pass with little fanfare absent particularly sharp deviations from previously seen results. Revised UK GDP figures for the same period will probably follow a similar dynamic. On the sentiment front, S&P 500 stock index futures are pointing narrowly lower, hinting at lingering jitters across financial markets
Asia Session: What Happened
HSBC Flash China Manufacturing PMI
Euro Session: What to Expect
German GDP n.s.a. (YoY) (1Q F)
German GDP w.d.a. (YoY) (1Q F)
German Capital Investment (1Q)
German Government Spending (1Q)
German Construction Investment (1Q)
German Private Consumption (1Q)
France Production Outlook Indicator (MAY)
France Own-Company Production Outlook (MAY)
France Business Confidence Indicator (MAY)
French PMI Manufacturing (MAY P)
German PMI Manufacturing (MAY P)
Euro-Zone PMI Composite (MAY P)
Euro-Zone PMI Manufacturing (MAY P)
Euro-Zone PMI Services (MAY P)
German IFO – Business Climate (MAY)
German IFO – Expectations (MAY)
German IFO – Current Assessment (MAY)
BBA Loans for House Purchase (APR)
Gross Domestic Product (QoQ) (1Q P)
Gross Domestic Product (YoY) (1Q P)
Gross Fixed Capital Formation (1Q P)
Total Business Investment (QoQ) (1Q E)
Total Business Investment (YoY) (1Q E)
Index of Services (3M/3M) (MAR)
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German Producer Prices Were Higher than Expected in April

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By David Schutz, 18 May 2012 05: 00 GMT THE TAKEAWAY: German producer prices above expected-> Focus remains on political developments-> Euro continues to suffer from risk-off environment

Producer prices climbed in April, coming in above expectations at 0.2% on the month versus 0.3% expected. The yearly number was 2.4%, versus 2.5% expected. Although the numbers were higher than economists had predicted, they represented a drop from March.

Market remained focused on political developments in the Eurozone, with political instability contributing to an intense bout of risk aversion and selling of currencies in favor of the US Dollar.

EURUSD approached the 2012 lows in early European trade as investors continued to sell the single currency.

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18 May 2012 05: 00 GMT

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Joint Insensitive Euro German ZEW, low GDP to EZ survey

The Takeaway: survey German ZEW mixed-> GDP eurozone lower than expected-> insensitive Euro as remains to focus on political developments in the market
The Centre of base German ZEW said its monthly index of analysts and investors expectations fell to 10.8 23.4 in April. The current index of the situation from the previous 39.0 to 44.1.
The ZEW index attempts to predict the economic evolution of six months in advance. The Centre added that economic conditions have stabilized and said that he generally expected additional positive developments from the Germany over the next 6 months.
During this time, economic growth in the Euro zone stagnated in the first quarter of 2012, announced today that the EU Statistics Office. The growth was 0.0% compared to the fourth quarter of 2011. The report came after an earlier report which said German economic growth was more than expected in the first quarter. The German economy has withstood the recession as ultra low unemployment support consumer spending and offset a decline in international demand.
However, concerns about the uncertain Greek political situation caused some doubts on the future of the Euro. The uncertain results of the recent election of Greek and the inability of the Greek leaders to form a stable government threw markets in limbo and cast doubts on the future of the Greece to the single currency. A Greek exit would lead to European Governments to lose huge sums of money loaned to the Greece and would probably throw the entire region into economic chaos.

The latest batch of data did not move markets. The Euro is weakening slightly intraday after climbing high, on the back of the stronger than expected data German.

European market update: Greece said the European GDP data and the German ERF survey varied session

 Tuesday, May 15, 2012 5:53:18 AM European Market Update: Greece said to make €430M bond payment today; European GDP data and German ZEW Survey were mixed in session***Economic Data***

- (JP) Japan Apr Consumer Confidence: 40.0 v 40.8e
- (SG) Singapore Mar Retail Sales M/M: 1.6% v 0.2%e; Y/Y: 9.1% v 7.2%e; Retail Sales Ex Auto Y/Y: 6.5% v 3.5%e
- (FR) France Apr Consumer Price Index M/M: 0.1% v 0.2%e; Y/Y: 2.1% v 2.2%e; CPI Ex Tobacco Index: 124.80 v 124.84e
- (FR) France Apr CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 2.4% v 2.5%e
- (FR) France Q1 Preliminary Gross Domestic Product Q/Q: 0.0% v 0.0%e; Y/Y: 0.3% v 0.5%e
- (FI) Finland Mar GDP Indicator: 2.4% v 3.5% prior
- (DE) Germany Q1 Preliminary GDP Q/Q: 0.5% v 0.1%e; Y/Y: 1.7% v 0.9%e; GDP wda Y/Y: 1.2% v 0.8%e
- (FR) France Q1 Preliminary Non-Farm Payrolls Q/Q: +0.1 v -0.2%e; Wages Q/Q: 0.9% v 0.7%e
- (AT) Austria Q1 GDP Q/Q: 0.2 v 0.0% prior; Y/Y: 1.9 v 0.8% prior >- (CZ) Czech Q1 Preliminary GDP Q/Q: -1.0% v +0.1%e; Y/Y: -1.0% v +0.2%e
- (HU) Hungary Q1 Preliminary GDP Q/Q: -0.7% v -0.5%e; Y/Y: -1.3% v -0.1%e
- (HU) Hungary Mar Final Industrial Production M/M: 0.6% v 0.6% prelim; Y/Y: 0.6% v 0.6% prelim
- (TR) Turkey Feb Unemployment Rate: 10.4% v 10.2% prior
- (FI) Finland Mar Current Account: -€40M v -€230M prior
- (DK) Denmark Apr Wholesale Prices M/M: 0.2 v 0.8% prior; Y/Y: 2.2% v 2.7% prior
- (NL) Netherlands Q1 Preliminary GDP Q/Q: -0.2% v -0.3%e; Y/Y: -1.1% v -1.1%e
- (NL) Netherlands Mar Trade Balance: €4.1B v €2.9B prior
- (SE) Sweden Q1 Total Number of Employees Y/Y: 2.3% v 2.8%e
- (TR) Turkey Apr Budget Balance (TRY) 1.4B v 1.1B y/y
- (IT) Italy Q1 Preliminary GDP Q/Q: -0.8% v -0.7%e; Y/Y: -1.3% v -1.2%e
- (NO) Norway Apr Trade Balance (SEK): 38.4B v 46.4B prior
- (UK) Mar Visible Trade Balance: -£8.6B v -£8.4Be; Total Trade Balance: -£2.7B v -£2.9Be; Trade Balance Non EU: -£4.1B v -£4.7Be >- (GR) Greece Q1 Advanced GDP Q/Q: %; Y/Y: -6.2% v -7.5% prior
- (EU) Euro Zone Q1 Advanced GDP Q/Q: 0.0% v -0.2%e; Y/Y: 0.0% v -0.2%e
- (DE) Germany May Zew Economic Sentiment: 10.8 v v 19.0e; Current Situation: 44.1 v 39.0e
- (EU) Euro Zone May ZEW Economic Sentiment: -2.4 v +13.1 prior
- (PT) Portugal Q1 Preliminary GDP Q/Q: -0.1%% v -1.0%e; Y/Y: -2.2% v -3.1%e
Fixed Income: >- (GR) Greece Debt Agency (PDMA) sold €1.3B v €1.0B in 13-week Bills; avg yield 4.34% v 4.20% prior; Bid-to-cover: 2.32x v 2.46x prior
- (SE) Sweden sold SEK2.5B vs. SEK2.5B indicated in 3.5% 2022 Bonds; avg yield 1.4696%
- (ZA) South Africa sold total ZAR2.1B vs. ZAR2.1B indicated in 2018, 2026 and 2041 bonds
- (EU) ECB allotted €43.0B vs. €39.0Be in 7-Day Main Refinancing Tender at fixed 1.0%
- (HU) Hungary Debt Agency (AKK) sold HUF45B in 3-Month Bills; Avg Yield 7.16% v 7.16% prior; Bid-to-cover: 2.02x v 2.40x
- (UK) DMO sold £2.75B in 5% 2025 Gilts; Avg Yield 2.251% v 2.356% prior; Bid-to-cover: 2.09x v 1.8x prior; Tail 0.2bps vs. 0.4bps prior
- (BE) Belgium Debt Agency sold total 3.39B vs. €3.0-3.5B in 3-month and 12-month Bills
- Sold €1.465B in 3-month Bills; Avg yield 0.201% v 0.179% prior; Bid-to-cover: 3.97x v 2.62x prior
- Sold €1.925B in 12-month Bills; Avg yield 0.627% v 0.734%prior; Bid-to-cover: 2.36x v 2.32x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Moodys cuts Italian banking sector (as expected)
- RBA minutes: Need to cut rates tp offset higher bank rates; CPI has slowed
- Greece will make bond payment of €430M today
- German, Eurozone & Portugal GDP beats expectations; Italy, emerging Europe do not
- Greek President Papoulias will attempt to persuade leaders to accept a technocratic government to avert another round of elections
- Hollande inaugurated as France's new President
***Equities*** >FTSE 100 +0.10% at 5469, DAX +0.20% at 6462, CAC-40 +0.40% at 3071, IBEX 35 -0.40% at 6783, FTSE MIB -0.30% at 13,622, SMI +0.10% at 5882
- European equity indices opened the session slightly higher, following the losses seen on Monday's session. Additionally, banks opened higher, but are currently trading in negative territory, as peripheral government bond yields have moved higher. The better than expected Q1 GDP data out of Germany has been offset by disappointing growth figures out of Italy and mixed German ZEW data. Additionally, concerns related to Greece's political situation and Spanish banks have continued to linger. In Greece, the Athens Stock Exchange has risen by more than 0.50%, while Greece's 10 yr bond yield has risen by over 10bps on the session amid reports that Greece will make the €430M debt payment, which is due today.
- UK-listed Smiths Group [SMIN.UK], Babcock International [BAB.UK], Afren [AFR.UK] and G4S [GFS.UK] are all trading higher following the release of their respective financial reports. Shares of Germany's largest steel maker, Thyssenkrupp [TKA.DE] have declined by over 2% on the session, as the company reported weaker than expected quarterly revenues. Merck KGAA [MRK.DE] and Air Berlin are also trading lower after their respective Q1 earnings reports. In other German movers, Phoenix Solar [PS4.DE] has gained over 9% following its quarterly earnings release, while Sky Deutschland [SKYD.DE] is higher by over 5% as the company reported better than expected quarterly revenues.
In France, shares of Iliad [ILD.FR] are higher by over 4%, as the company's Q1 sales beat analyst expectations. Additionally, Vivendi [VIV.FR] has gained more than 3% on better than expected Q1 results. Swiss private bank Julius Baer is lower by more than 2%, as the company said its year to date gross margin was below the level seen in 2011. Italian banks opened the session mostly higher, despite the decision by Moody's to downgrade 26 Italian banks. Italian banking name Intesa [ISP.IT] is due to report its quarterly earnings later today.
Speakers: >- Greece will pay holdouts €430M of a Euro bond maturing today
- France President Hollande commented in his acceptance sppech that he vowed to open a new path for Europe and that France had always overcome challenges
- Head of Greek Independent party Kammenos denied having sent document to president's office with proposals for forming a government
- ZEW Economists commented that political uncertainty in Greece and France contributed to the drop in its May Survey and that economic risks had risen in recent weeks. Growth and consolidation did not contradict each other and that austerity must be pursued in some European countries. There was the expectation of small banking crisis during the next 6 months, as sectorally everything was quite well, except for the banking sector. The ZEW noted that the exchange rate expectations was for Euro to weaken as expectation of the Euro Zone crisis would intensify again
- EU's Juncker commented that the topic of a new Eurogroup chief was not on today's agenda. He reiterated that he was confident Spain to reach 2013 deficit target
- France Fin Min Baroin stated that the French banking sector could absorb Greek losses
- UK Chancellor Osborne commented that the Euro Region must stand behind its currency. Uncertainty was undermining Euro Area economies and that strengthening the banking sector was part of the solution
- Spain Fin Min De Guindos commented that Spain asked for ECB role in auditing banking sector. He noted that EFSF aid for banking sector was not discussed
- German CDU official Altmaier stated that it was certain that Germany and France would agree on a common euro crisis approach by the end of June at the latest. He reiterates that expected the fiscal compact to be approved by the German Parliament before the summer recess
- German SPD (opposition) stated that Chancellor Merkel policies were leading Europe into recession and called for investment and fiscal pact
- German SDP's Steinmeier (opposition) doubted that the ESM and fiscal compact would be ratified before summer recess. Party would need to decide whether it backed the fiscal pact depending on what growth measures are added. He expected Chancellor Merkel to accept an EU growth pact
- Slovakia gov't won a confidence vote on its austerity program, as expected
- India Junior Oil Min commented that India to import 15.5M tons of crude oil from Iran in FY13 compared to 17.4M tons y/y
- Norway Govt revised its 2012 budget with the overall surplus revised higher to NOK381B vs. NOK346B seen in Oct . Structural non-oil deficit was raised to to NOK116B vs. NOK112.2B seen in Oct and the non-oil Defciit to GDP to 3.5% vs. 3.9% prior. Norway cut it 2012 non-oil GDP growth to 2.7% from 3.1% prior Oct view and lowered 2012 Core CPI to 1.4% from 1.8% seen in Oct. It noted that the budget was somewhat more expansive compared to October budget
- IMF commented on Sweden and noted that various financial fragilities were apparent in the country that included household debt and a softening housing market
- Sweden Central Bank's Wickman-Parak: Reasonable to assume that the Euro crisis will be solved
- South Africa Central Bank (SARB) approved provision of liquidity facility to help banks meet Basel III requirements
- Singapore Dep PM commented that the Euro Zone debt crisis escalation might have substantially spilled over into global markets and could not rule out a deeper recession in Europe and more market stress as a result
- (IR) Iran envoy: Discussions with IAEA have been constructive
Currencies: -
- The early part of the session exhibited some consolidation of recent moves in markets, including currencies. A stronger German Q1 GDP helped to contain some of the risk aversion coupled with word that Greece would make the €430M bond payment today. However, as other Euro Area members reported their respective GDP highlighted the two-tier growth and some of the earlier euphoria faded. German ZEW investor confidence was weaker than expected and provided another headwind for any prolong Euro rebound. As the NY morning approached the EUR/USD was steady at 1.2845, about 20 pips higher from it Far East open. The market will now focus on key US economic data and EcoFin meeting.
Political/ In the Papers:
- The Trades Union Congress (TUC) reported that due to the inability to find full-time work the number of part-time workers more than doubled over the past four years. Approximately 600K men were working part-time in December while looking for full-time positions compared to 293K at the end of 2007. In addition, total in involuntary part-time work hit 1.4M (highest reading since records began in 1992).
***Looking Ahead***
- (PT) Bank of Portugal releases 2011 Annual Report
- (IT) EU's Barroso to meet Italy PM Monti
- 6:00 (EU) EFSF to sell €1.0B in 2.0% 2017 Notes
- (PE) Peru Mar Economic Activity Index Y/Y: No est v 7.2% prior
- (PE) Peru Apr Unemployment: No est v 8.7% prior
- 6:00 (EU) EU Officials Hold Meeting With Ukraine's Foreign Minister
- 6:00 (PT) Portugal Q1 Labour Costs: No est v -1.7% prior
- 7:00 (DE) German Chancellor Merkel
- 7:00 (EU) ECB; to drain €214.0B to offset govt bond purchases
- 7:30 (US) Weekly ICSC Chain Store Sales
- 7:45 (EU) EU Finance Ministers (Ecofin) press conference
- 8:00 (IC) Iceland Apr Unemployment Rate: No est v 7.1% prior
- 8:00 (PL) Poland Apr CPI M/M: 0.5%e v 0.5% prior; Y/Y: 3.9%e v 3.9% prior
- 8:30 (US) Apr Consumer Price Index M/M: 0.0%e v 0.3% prior; Y/Y: 2.3%e v 2.7% prior
- 8:30 (US) Apr CPI Ex Food & Energy M/M: 0.2%e v 0.2% prior; Y/Y: 2.3%e v 2.3% prior
- 8:30 (US) Apr Consumer Price Index NSA: 229.9000e v 229.392; CPI Core Index SA: No est v 228.432 prior >- 8:30 (US) May Empire Manufacturing: 9.50e v 6.56 prior
- 8:30 (US) Apr Advance Retail Sales: 0.2%e v 0.8% prior; Sales Less Autos: 0.2%e v 0.8% prior; Retail Sales Ex Auto & Gas: 0.3%e v 0.7% prior
- 8:55 (US) Weekly Redbook Retail Sales
- 9:00 (US) Tsy Sec Geithner
- 9:00 (BE) Belgium Mar Trade Balance: No est v -€152.3M prior
- 9:00 (US) Mar Total Net TIC Flows: $32.5Be v $107.7B prior; Net Long-term TIC Flows: No est v $10.1B prior
- 9:00 (PL) Poland Apr YTD Budget Level (PLN): No est v -23.0B prior; Budget Performance YTD: No est v 65.6% prior
- 9:00 (EU) ECB Forex data
- 9:30 (US) Fed's Duke
- 10:00 (US) Mar Business Inventories: 0.4%e v 0.6% prior
- 10:00 (MX) Mexico weekly International Reserves
- 10:00 (US) May NAHB Housing Market Index: 26e v 25 prior
- 11:00 (US) Fed to sell $8.00-8.75B in Notes
- 11:30 (US) Treasury to sell $30B in 4-Week Bills
- 11:30 (IS) Israel Apr Consumer Prices M/M: 0.8%e v 0.4% prior; Y/Y: 2.1%e v 1.9% prior
- 12:30 (FR) German Chancellor Merkel to meet France President Hollande
- 14:30 (EU) EU's Rehn Speaks at Dinner Event in Brussels
- 16:30 (US) Weekly API Energy Inventories
- (US) Republican Nebraska Primary
- (US) Republican Oregon Primary Legal disclaimer and risk disclosure All information 

€ Euro under pressure despite of strong German industrial data

THE TAKEAWAY: Strong German industrial data-> Euro and risky currencies Markets digest French, Greek election results
German industrial production was stronger than expected in March, removing some of the bite from a weak open weekly for the single currency. Production rose 2.8% on the month, more than the - 0.3% markets had expected. The yearly number was 1.6% versus the expected - 1.2%, the German stats Office said today. Both the monthly and yearly figures saw upward revisions.
Germany has struggled to maintain industrial growth as declining global demand continues to erode. Even so, Europe's largest economy remains its strongest, although yesterday's election results from France and Greece threaten to test Berlin's mettle in demanding tough reforms across the Eurozone. Both nations elected anti-austerity parties in a repudiation of the German-led drive to reduce sovereign debt in the Euro-area.
Germany's leader Merkel reportedly told French President-Elect Holland that the Eurozone fiscal compact approved last fall is not up for renegotiation. Berlin has taken a similar hard position regarding Greece, where last weekend's election results are likely to bring increased opposition to austerity.

The Euro remained pressured today as risk-correlated currencies took a beating in the wake of uncertainty over the Eurozone's future.

€€€ Euro to Look Past German Jobs Data to PMI Revisions, Pound at Risk

Euro Likely to Look Past German Unemployment Data, Focus on PMI Revisions British Pound Selling May Continue on Construction PMI, Mortgage Approvals US Dollar, Risk Appetite Outlook Hinges on ADP Report with QE3 Bets in stream Japanese Yen Sold as Asian Stocks Rise Following Surprisingly Strong US ISM German Unemployment figures headline the calendar in European hours, with expectations calling for the economy to add 10,000 jobs in April. The unemployment rate is expected to hold at 6.7 percent, a record low. On balance, the resilience of the German labor market is nothing new and ought not to prove particularly market-moving for the Euro, with traders paying closer attention to final revisions of April's Eurozone Manufacturing PMI numbers.
Early estimates showed the factory sector shrank at the fastest pace since June 2009, pointing to deepening recession. This may prove to weigh on the single currency through building ECB rate cut expectations ahead of this week's policy meeting. Although no. change in benchmark lending rates or the announcement of new LTRO efforts are expected this time around, signs of an increasingly aggressive slowdown will pay investors for dovish rhetoric from ECB President Mario Draghi.
Elsewhere on the docket, UK Construction PMI is expected to show the home-building industry grew at the weakest rate in three months while Mortgage Approvals hit the lowest since March 2011. With monetary policy expectations in focus, these outcomes may reinforce downward pressure on the British Pound following yesterday's dismal manufacturing PMI result.
Later in the session, the U.S. ADP Employment report will enter the spotlight. The likelihood of a Fed QE3 program remains a driving theme for the US Dollar and risk appetite at-large, meaning a soft outcome is likely to be taken as fodder for stimulus hopes and weigh on the greenback. Alternatively, an upside surprise will probably produce the opposite result.
The Japanese Yen underperformed in overnight trade, sliding as much as 0.4 percent, as Asian stocks advanced and sapped demand for the safe-haven currency. The MSCI Asia Pacific regional benchmark equity index added 0.7 percent after a stronger-than-expected ISM Manufacturing print from the US improved the outlook for regional exporters.
Asia Session: What Happened
Labor Cash Earnings (YoY) (MAR)
Euro Session: What to Expect
Retail Sales (Real) (YoY) (MAR)
Italian PMI Manufacturing (SAM)
French PMI Manufacturing (APR F)
German Unemployment Change (APR)
German Unemployment Rate s.a. (APR)
German PMI Manufacturing (APR F)
Italian Unemployment Rate s.a. (MAR P)
Euro-Zone PMI Manufacturing (APR F)
NET Lending dry. on Dwellings (MAR)
M4 Ex IOFCs 3 m Annualised (MAR)
Euro-Zone Unemployment Rate (MAR)
Critical Levels

>> Rise in German Unemployment Further Discourages Euro Investors

The Takeaway: Germany unemployment increases 19 k, despite expectations for autumn 10 K-> positive labour said that the trend of the market were outweighed by slowing of the economic-> Euro drops dynamic as weak Manufacturing PMI also comes
Unemployment increased unexpectedly in April by a people of 19 000 seasonally adjusted to 2.87 million. The rise in unemployment is much greater than the expectations of analysts, for the rate of fall by 10,000 people. According to Nuremberg on the Federal Labour Agency, the current unemployment rate now stands at 6.8%, compared to 6.7% in March.
The positive trend on the labour market was offset by the loss of momentum in the economy, according to the Federal Labour Agency President Frank - Juergen Weise.
The weak employment data were released at the same time that the German PMI manufacturing survey came in lower than expected. High unemployment will generally not be consumer spending and drag down economic growth, and signs of this morning of a slowdown in the economy are because of anxiety over the European debt crisis.

EUR/USD has been a free fall in the half hour before the figures of unemployment, as weaker that expected data PMI came Italy and France. The Euro continued to weaken after release of employment, to the low 1.3155 last week.

€ Euro Pressured after Survey Says Consumer Confidence to Weaken German

The Takeaway: German GfK provides weakening-> energy costs consumer confidence, inflation weakens the weight given the power to purchase-> Euro against US Dollar

The German consumer confidence will decrease in May that rising energy costs weakening purchasing power of households, the Institute German GfK, said today. The GfK consumer confidence index can set revised drop 5.6% to 5.8% in April. Markets expected a reading of may of 5.9%, based on the median forecasts by a team of economists.

Rising prices of energy have been seen weighing on household spending as inflation creeps power by threatening to torpedo the economic recovery of Europe. Fears of inflation have seeped to the surface in Germany property increase prices and monetary policy remains loose. Rising inflation in Germany could have repercussions generalized to the rest of the Germany of the given euro size and influence of the 17-nation bloc.

|| Vulnerable Euro Bond sale results, German forecast update

Discussion points
Euro seems vulnerable on the Italian and Dutch Bond Auction results Germany to release the value of macroeconomic forecast updates for 2012 Australian Dollar sank after ICC disappoints, stimulate the RBA cut rates Paris the Euro is in a precarious position that views on the results of auctions of binding andItalian Dutch markets and the release of macro-economic forecasts updated by the Ministry of the German economy. Rome will sell coupon 2014 debt and inflation-linked 2017 and 2019 paper while Amsterdam is 2014 and 2037 links. Traders will be be keeping a close eye on the average yields of signs of sovereign stress of return.
The auction comes in the growing concern that the anti-austerity feeling fuels political instability in the region and can undermine the efforts of debt reduction. French President Nicolas Sarkozy lost in the first round of his re-election challenger anti-austerity campaign Francois Holland over the weekend in Dutch Prime Minister Mark Rutte and his cabinet resigned yesterday, having failed to agree on additional measures for deficit reduction.
During this time in Germany, a set of update of the official Government forecasts will be size against readings of PMI manufacturing and services April sharp drop of yesterday. Officials cut their prospects for growth of GDP 2012 to 0.7% in January of 1.0% in October of last year. A further reduction could to influence the risk appetite - stimulating Mint haven such as the Dollar and the Japanese Yen - that the dominant across financial markets theme is the degree to which a recession in the euro area will be derailing world production as a whole.
The lower Australian Dollar in trade during the night, collapse up to 0.8% against its major counterparts, after the digits of the price index dropped by forecasts of economists and strengthened expectations of an RBA interest rate cut next week policy meeting. The report shows that annualized inflation rate fell to 1.6% in the first quarter, the lowest in two years and a half.
More worrisome, the decrease in percentage of 1.5 point rate of 3.1% in the three months to December 2011 marked the largest quarterly decline in more than a decade. Markets, now the price of the certainty of a 25 bps decrease the rate of loan of reference with a slight possibility of a greater reduction, according to data compiled by the Credit Switzerland. The prospects for 12 months implies now 110 bps overall relaxation.
Asia session: What happened
Corporate price (YoY) (MAR)
Index of consumer prices (QoQ) (first quarter)
Index of consumer prices (YoY) (first quarter)
Weighted median RBA (QoQ) (first quarter)
Weighted median RBA (YoY) (first quarter)
Conference Board leading economic index (MAR)
Credit card spending s.a. (MoM) (MAR)
Credit card, spending (YoY) (MAR)
Session of the euro: what to expect
Of France (APR) consumer confidence indicator
Survey companies of France - aggregate demand (APR)
Netherlands to sell 2014-2037 links
Italian hourly wage (MoM) (MAR)
Italian hourly wages (YoY) (MAR)
Public finances (PSNCR) (£) (MAR)
Sector public borrowing Net (£) (MAR)
Italy sells 2014 zero-PCN, 2017-2019 I / L links
German Econ Department publishes forecasts
Critical levels

>>>> German Business Sentiment Reaches 6-Month High, Beats Expectations

TAKEAWAY: German business climate defies expectations to reach 6-month high -> Shows resilience against global growth concern -> EUR/USD remains locked in 12 day range
Germany’s business climate improved for the sixth straight month, hitting a new high of 109.9. The survey, which is conducted by the IFO Institute and based on 7,000 executives’ responses, beat analysts’ estimates of a drop to 109.5 from last month’s 109.8 level. The IFO’s current assessment survey also beat estimates and rose to 117.5 as did the expectations survey which stayed level with the previous month at 102.7.
The IFO survey is one of the best indicators of business sentiment in Germany; and these positive results combined with this month’s positive ZEW survey show that world economic concerns are not affecting German outlook. German economic indicators are the most important out of all the European countries, as Germany makes up one quarter of the Eurozone’s GDP.
Professor Hans-Werner Sinn, head of Germany's IFO Institute, said he was surprised that Germany’s retail sector maintains a positive outlook despite higher inflation, but expects the German economy to improve from quarter to quarter in 2012.

 EUR/USD jumped following the better than expected business climate, but still hasn’t broken out from its week long 1.3215 resistance level. EUR/GBP also rose following the release, setting a new daily high. Many analysts refrain from suggesting a directional bias for EUR/USD until it breaks out from its 12 day, 200 point range.

€€ Euro to Look Past German IFO as Markets Stay Focused on Earnings

20 April 2012 07:15 GMT   Talking Points

German IFO Unlikely to Yield Strong Response, Earnings News in Focus S&P 500 Stock Index Futures Point to Cautiously Risk-On Environment US Dollar Consolidates vs. Major Currencies in Quiet Overnight Trade Major currencies consolidated against the US Dollar (ticker: USDollar) in quiet overnight trade. In European hours, the German IFO business confidence survey headlines the economic calendar, with median forecasts calling for a modest pullback in the headline Business Climate index. A print in line with expectations (109.5) would snap a streak of five consecutive increases but the rising trend playing out since late last year would be left firmly intact, both on a month-to-month and 3-month average basis. On balance, this seems to offer little that has not been priced in already, amounting to modest market-moving potential for the Euro.

Looking ahead, the corporate earnings docket enters the spotlight once again. The central uncertainty driving financial markets remains the degree to which an accelerating recovery in the US can offset a recession in the Eurozone and a slowdown in China. This means traders will be focused on guidance from cycle-sensitive companies to establish near-term direction for risk appetite trends. This time around, first-quarter reports from McDonald’s and Kimberly-Clark will be sought for a gauge of consumer sentiment while those from Honeywell, General Electric and Schlumberger will serve as a proxy for broad-based global growth trends. Sideline comments from the G-20 Finance Ministers’ meeting as well as the ongoing IMF and World Bank summit may also factor into the equation.

S&P 500 stock index futures are pointing higher in late Asian trade, arguing for a broadly risk-supportive environment (at least for the time being). This generally bodes well for stocks-linked currencies, particularly the Australian, Canadian and New Zealand Dollars. To some extent, the same can be said of the Euro, while the British Pound appears focused on BOE policy rather than risk appetite. The still-formidable correlation between benchmark 10-year US Treasury yields and USDJPY suggests sentiment-based moves will be indirectly transmitted into Yen price action as well, with the Japanese currency finding itself on the defensive in the event that an upbeat session sends shares higher and weighs on bond prices. Needless to say, the return of risk aversion would produce polar-opposite results.

Asia Session: What Happened

Tertiary Industry Index (MoM) (FEB)

MNI Flash Business Sentiment Survey (APR)

Euro Session: What to Expect

German Producer Prices (MoM) (MAR)

German Producer Prices (YoY) (MAR)

Convenience Store Sales (YoY) (MAR)

German IFO - Business Climate (APR)

German IFO - Current Assessment (APR)

German IFO - Expectations (APR)

Retail Sales ex Auto Fuel (MoM) (MAR)

Retail Sales ex Auto Fuel (YoY) (MAR)

Retail Sales w/Auto Fuel (MoM) (MAR)

Retail Sales w/Auto Fuel (YoY) (MAR)

European Market Update: Stronger German ZEW fails to inspire European markets; ECB overnight borrowings soar to over 15B

European Market Update: Stronger German ZEW fails to inspire European markets; ECB overnight borrowings soar to over €15B***Economic Data*** - (RU) Russia Central Bank (CBR) left its key rates unchanged (as expected) with Refinancing Rate at 8.00% level; Overnight Deposit Rate at 4.00% and the Overnight Auction-Based Repo at 5.25% - (EU) ECB: €15.6B borrowed in overnight loan facility v €632M prior; €795.2B parked in deposit facility vs. €798.0B prior

- (FR) France Feb Consumer Price Index M/M: 0.4% v 0.4%e; Y/Y: 2.5% v 2.4%e v 2.3% prior; CPI Ex Tobacco Index: 123.58 v 123.66e
- (FR) France Feb CPI EU Harmonized M/M: 0.5% v 0.5%e; Y/Y: 2.5% v 2.6%e
- (FI) Finland Jan Final Retail Sales Volume Y/Y: No est v 4.5% prior
- (FR) France Jan Current Account: -4.2B v -€2.8B prior
- (CZ) Czech Jan Industrial Output Y/Y: 3.2% v 3.0%e; Construction Output Y/Y: -5.3% v +14.5% prior
- (HU) Hungary Feb Consumer Prices M/M:0.8% v 0.5%e; Y/Y: 5.9% v 5.6%e
- (ES) Spain Feb Consumer Price Index M/M: 0.1% v 0.1%e; Y/Y: 2.0% v 2.0%e
- (ES) Spain Feb CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 1.9% v 1.9%e
- (ES) Spain Feb CPI Core M/M: 0.0% v -0.1%e; Y/Y: 1.2% v 1.1%e
- (CH) Swiss Feb Producer & Import Prices M/M: 0.2%e v 0.0% prior; Y/Y: -2.4%e v -2.4% prior
- (HK) Hong Kong Q4 Industrial Production Y/Y: -2.2% v +0.2% prior; Producer Price Y/Y: 6.5% v 9.5% prior
- (NL) Netherlands Jan Trade Balance: €4.1B v €4.1B prior
- (SE) Sweden Feb CPI Headline Rate M/M: 0.7% v 0.5%e; Y/Y: 1.9% v 1.8%e; CPI Level: v 313.67e
- (SE) Sweden Feb CPI Underlying (CPIF) M/M: 0.7% v 0.6%e; Y/Y: 1.1% v 1.0%e
- (CZ) Czech Jan Current Account (CZK): 14.2B v 10.2Be
- (IT) Italy Feb Final CPI (NIC incl. tobacco) M/M: 0.4% v 0.4%e; Y/Y: 3.3% v 3.3%e
- (IT) Italy Feb Final CPIEU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 3.4% v 3.4%e
- (RU) Russia Jan Trade Balance: $20.5B v $20.6Be
- (ZA) South Africa Jan Gold Production Y/Y: -11.3% v -8.2% prior; Mining Production Y/Y: -2.5%% v +0.9% prior
- (UK) Jan DCLG UK House Prices Y/Y: 0.2% v 0.1% prior
- (UK) Jan Visible Trade Balance: -£7.5B v -£7.9Be; Total Trade Balance: -£1.8B v -£1.9Be; Trade Balance Non EU: -£3.7B v -£4.3Be
- (DE) German Bundesbank publishes 2011 Annual Report: Net profit €600M v €2.2B y/y
- (DE) Germany Mar ZEW Economic. Sentiment: 22.3 v 10.0e; Current Situation: 41.5e
- (EU) Euro Zone Mar ZEW Economic Sentiment: +11.0 v -8.1 prior
Fixed Income: - (NL) Netherlands Debt Agency (DSTA) sold €2.825B €2.5-3.5B indicated in April 0.75% 2015 DSL Bonds; Avg Yield 0.618% v 0.853% prior
- (ZA) South Africa sold ZAR2.1B in 2017, 2021 and 2036 bonds
- (IT) Italy Debt Agency (Tesoro) sold total €12.0B v €12.0B indicated in 3-month and 12-month Bills
- Sold €8,5B vs €8.5Be in 3-Month Bills; Avg Yield 0.439% v 1.735% prior; Bid-to-cover.2.23x v 3.05x prior
- Sold €3.5B vs. €3.5e in 12-month Bills; Avg Yield 2.392% v 2.230% prior; Bid-to-cover: 1.38x v 1.09x prior
- (EU) ECB allotted €42.2B in 7-Day Main Refinancing Tender at fixed 1.00% vs. €17.5B prior
- (EU) ECB allotted € in 1-Month Refinancing Tender at fixed 1.0% vs. €14.3B prior
- (HU) Hungary Debt Agency (AKK) sold HUF55B vs. HUF50B Target in 3-Month Bills; avg Yield 7.25% v % prior; Bid-to-cover: x v x prior
- (BE) Belgium Debt Agency sold total €3.26B vs. €3.2B indicated in 3-month and 12-month Bills
- Sold €1.625B vs. €1.6Be in 3-month Bills; Avg Yield 0.188% v 0.211% prior; Bid-to-cover: 2.64x v 2.34x prior
- Sold €1.63B vs. €1.6Be in 12-month Bills; Avg Yield 0.586% v 0.892% prior; Bid-to-cover: 2.58x v 2.64x
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- BOJ hold interest rates steady, as expected
- Final approval of Greek Bailout likely Wednesday; third rescue 'unlikely'
- Spain agrees to an additional 0.5% in cuts to bring deficit target down to 5.3% in 2012
- EU and Japan to Join US in making Rare Earth case against China
before WTO
- Criteria for US banking sector stress tests released: To include unemployment rate as high as 13%, equity price decline of 50%, and housing price decline of 21%
- ECB overnight borrowing climbs to €15B
- Swiss Producer & import data shows the country is winning the fight against deflation
- German ZEW survey continues to outperform
Equities: FTSE 100 +0.80% at 5941, DAX +1.1% at 6973, CAC-40 +1.1% at 3528, IBEX-35 +1.2% at 8279, FTSE MIB +1.4% at 16,689, SMI +0.70% at 6234
- European shares rose ahead of Fed's policy meeting and after strong US retail sales data. German ZEW also came much stronger than expected, the highest since June 2010. The positive data from two of the world's growth engine has aided risk appetite.
- Among notable news, Antofagasta [ANTO.UK] fell after net income missed expectations while EBITDA and Revenue came in line. Dividend also decreased and that had included a special dividend paid in 2010.
Speakers:
- EU's Juncker commented ahead of the secod day of Eurogroup meeting that it was best if a sitting central bank governor succeeded Gonzalez-Paramo on the Board. He noted that EMU growth outlook was not the best but markets now knew EMU was committed to stability. Juncker ruled out private sector involvement for Portugal and reiterated that the country remained on track for the next few years. He also noted that Italy was performing well and had no concerns
- EU/IMF analysis update noted that the prospects of Greece returning to the markets at program end was uncertain. It noted that privatization efforts to bring €45B in 2012-20 (€12B in 2012-14. The economy of Greece to stabilize in 2013 and indicated mild cyclical recovery for 2014-17 period. It stressed that Greece must maintain good policies through 2030 to reduce debt to below 100% of GDP. The cost of the financial system support estimated at €50B.
- BOJ Gov Shirakawa commented in his post rate decision press conference that the central bank to back its strong easing policy and would continue to do utmost to beat deflation. He noted that it must watch crude oil's price impact on domestic economy. The Feb easing was one factor behind the JPY currency weakness and added that the easing in European tension and signs of improvement in US were factors for the JPY price action.. Whether Japan was heading for desirable price growth is key to its policy decision. Decided to expand loans for growth as part of package to defeat deflation but was concern weakening over BOJ's loans were inviting fierce competition among banks
- European Finance Ministers and officials comment ahead of the second day of meetings.
- EU's Barroso commented to EU Parliament that the situation remained fragile in Europe and that a reinforced firewall was an indispensable part of strategy
- EU President Van Rompuy addressd the European Parliament and reiterated that EU was at a turning point
- Spain Fin Min de Guindos commented that Spain would comply with the additional budget deficit reduction for 2012
- Sweden Fin Min Borg stated that must not see any reduction in Spain's credibility. Financial transaction tax would increase costs for companies and govts
- Luxembourg Fin Min Frieden stated that increasing size of regional firewall was not urgent although some EU countries would have problems for years to come. He also noted that the transaction tax could divert business away from Europe
- Austria Fin Min Fekter: Would be better to give Hungary time to adjust
- German Fin Min Schaeuble noted that the meeting would sees an orientation debate on Financial Transaction tax (Tobin Tax) and saw no reason to exempt financial trades from tax. The minister added that he knows that such a tax can only be achieved on a European level and not globally and should consider alternatives if cannot get a tobin tax on a European level. The tax should be discussed at the Ecofin meeting at the end of March but the debate should not drag on
He commented that Greece's debt to GDP outlook was better than foreseen
- ZEW Economist Franz commented that the German economy was in remarkably good shape and was less concerned about the debt crisis at this time. Domestic demand to keep boosting German growth but risks would continue due to the low European activity elsewhere. Strong German industrial production triggers index improvement. The ZEW saw the case for higher interest rates due to rising CPI but the fragile economic situation did not permit an increase
- China Foreign Min official Lui commented that China's rare earth policy complied with WTO rules and that charges of it monopolizing rare earths were 'groundless'. He noted that China exploitation of rare earth was not sustainable but would continue to export
- Bundesbank President Weidmann commented that Target 2 claims were not a standalone risk because EU breakup was absurd
- Luxembourg Fin Min Frieden stated that he saw problem for Spain's 2013 deficit to GDP to be below 3% and added that the country needed to look into making additional budget cuts
- Japan METI energy official was said to later meet OPEC ministers in Kuwait this week on energy needs and that it viewed Saudi Arabia as a very important in replacing Iranian crude
- Moody's cut Cyprus sovereign ratings to 'Ba1' from 'Baa3'
Currencies:
- The EUR/USD maintained a steady repor in the early European session aide by reports of sovereign demand coupled with the euro zone finance ministers approval of the payout of Greece's second bailout. However high daily ECB borrowings raised a red flag on the fragility of the recovery in Europe. The better German ZEW survey failed to provide support but the EUR/USD continued to maintain its recent trading range for March with 1.3070 seen as support.
- The BOJ press conference provided an opportunity for the JPY currency to weaken across the board after Gov Shirakawa opening comment that the central bank wouldl continue with strong easing program. The USD/JPY recovered from a test of 82.00 to reach above 82.75 during the session.
- The higher Swiss inflation data pleased analysts but had little initial effect on the CHF currency pairs.
Political/ In the Papers:
- The President of the German Bundesbank Weidmann reiterated that central banks cannot solve the current crisis, and that emergency measures should be limited and temporary. Monetary policy should not focus on providing life support to weak banks.
- According to Dealogic, the year to date corporate bond issuances hit a record figure of $386 billion. Similarly, the Barclays Index showed the average spreads on investment-grade bonds narrowed to 184bps from 234bps at the end of 2011. The March average yields declined to 3.27% (the lowest reading since records began in 1973). Also junk bond yields declined to 7.19% from 8.36% at the end of 2011.
- In rating actions, Moody's cuts the sovereign ratings of Cyprus to junk status at 'Ba1' from 'Baa3', with a negative outlook, due to heightened concerns that the banking sector will require state support over its heavy exposure to Greece.
***Looking Ahead***
- (US) Congressional Budget Office (CBO) projection update
- 7:00 (IE) Ireland Jan Industrial Production M/M: No est v 2.5% prior; Y/Y: No est v -4.7% prior
- 7:00 (TU) Turkey to sell New Fixed Rate 2017 Bonds
- 7:00 (IC) Iceland to sell Bills
- 7:30 (EU) ECB's Draghi speaks in Paris
- 7:30 (US) Feb NFIB Small Business Optimism: 94.5e v 93.9 prior
- 7:45 (US) ICSC weekly chain store sales
- 8:00 (EU) ECB to drain €218.0B in7-Day Term Deposit Tender to offset Govt Bond Purchases (SMP)
- 8:00 (IC) Iceland Feb Unemployment Rate: No est v 7.2% prior
- 8:00 (SO) Slovenia Debt Agency (ARDAL) to sell 3-month, 6-month and 12-month Bills
- 8:30 (US) Feb Advance Retail Sales: 1.1%e v 0.4% prior; Retail Sales Less Autos: 0.7%e v 0.7% prior; Retail Sales Ex Auto & Gas: 0.5%e v 0.6% prior
- 8:55 (US) Weekly Redbook Retail Sales
- 9:00 (PL) Poland Feb CPI M/M: 0.3%e v 0.7% prior; Y/Y: 4.2%e v 4.1% prior
- 9:00 (PL) Poland Jan Current Account: -€1.0Be v -€1.3B prior; Trade Balance: -€380Me v -€1.1B prior
- 9:00 (DE) ECB's Weidmann speaks after Bundesbank publishes annual report
- 9:30 (EU) EU President Van Rompuy
- 10:00 (EU) ECB weekly Forex Reserves
- 10:00 (US) Mar IBD/TIPP Economic Optimism: 50.0e v 49.4 prior
- 10:00 (US) Jan JOLTs Job Openings: No est v 3.376M prior
- 10:00 (US) Jan Business Inventories: 0.5%e v 0.4% prior
- 10:00 (MX) Mexico Jan Industrial Production M/M: No est v 0.9% prior; Y/Y: No est v 2.8% prior
- 10:45 (UK) BOE to buy £1.5B in 2027-2060 Gilts in reverse auction
- 11:00 (BR) Brazil to sell 2016, 2018, 2022, 2030, 2040 and 2050 I/L bonds
- 11:00 (MX) Mexico weekly International Reserves
- 11:30 (US) Treasury to sell 4-Week Bills
- 12:00 (IT) Italy PM Monti meets German Chancellor Merkel in Rome
- 12:00 (IC) Iceland Feb International Reserves (DKK): No est v 1.1B prior
- 13:00 (US) Treasury to sell 10-Year Notes Reopening
- 14:15 (US) FOMC Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.25%
- 15:00 (AR) Argentina Feb Consumer Price Index M/M: No est v 0.9% prior; Y/Y: No est v 9.7% prior
- 15:00 (AR) Argentina Feb Wholesale Price Index M/M: No est v 0.9% prior; Y/Y: No est v 12.5% prior
- 16:30 (US) Weekly API Energy Inventories
- (US) Republican Alabama Primary
- (US) Republican Hawaii Caucus
- (US) Republican Mississippi Primary
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