Daily Afternoon Report 16/11/2012 | Forex Trading Analysis

The U.S. dollar was broadly higher against the other major currencies on Friday, as markets were jittery ahead of highly anticipated talks between U.S. President Barack Obama and Republican lawmakers on how to tackle the "fiscal cliff", while euro zone debt concerns remained.

The EUR/USD came under pressure after the European Central Bank said in a report that the euro zone's current account surplus narrowed more-than-expected in August, declining to EUR0.8 billion from an upwardly revised EUR10.9 billion the previous month,

Earlier this morning, Bundesbank’s Weidmann said that a banking union itself can be stabilizing, yet a banking union as a solution to the crisis is wrong. Weidmann also cautioned against an over-hasty banking union.

Also this morning, Swiss National Bank’s Thomas Jordan said that the central bank will continue to apply the Franc ceiling, as a stronger currency hurts the local Swiss economy. He also said that the SNB’s FX reserves expose the bank to substantial FX risk.

Meanwhile, investors remained concerned over the looming "fiscal cliff" in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.

There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise before then.

In latest news, the industrial production in the U.S. has declined in October as superstorm Sandy knocked out power in the Northeast. Output at factories, mines and utilities dropped 0.4 percent last month after a revised 0.2 percent increase in September that was smaller than previously estimated, Federal Reserve data showed today in Washington.

Furthermore, foreign investment in Canadian securities advanced to $13.9 billion in September on the strength of purchases of government bonds and corporate equities. Canadian investment in foreign securities reached a six-month high of $6.0 billion, led by the acquisition of US equities. Foreign investment in Canadian debt securities focuses on government bonds Foreign investors acquired $10.6 billion of Canadian debt securities in September, the largest such investment since May.

Daily Afternoon Report 15/11/2012 | Forex Trading Analysis

The U.S. dollar trimmed losses against the other major currencies on Thursday, after official data showed the number of people who filed for unemployment assistance in the U.S. last week surged to the highest level since April 2011.

As the U.S. Department of Labor said, the number of individuals filing for initial jobless benefits in the week ending November 10 rose by 78,000 to a seasonally adjusted 439,000, compared to expectations for an increase of 14,000 to 375,000.

Whereas, the euro held gains against the U.S. dollar on Thursday, after the release of mixed U.S. economic data, although concerns over the euro zone debt crisis and U.S. fiscal policy remained.

In the euro zone, official data released earlier showed that the region’s economy shrank 0.1% in the third quarter, following a contraction of 0.2% in the preceding quarter.

Year-on-year, euro zone gross domestic product fell 0.6% compared to a year earlier after contracting at a rate of 0.5% in the previous quarter.

Data also showed that Spain's economy contracted by 0.3%, while Italy’s economy shrank 0.2% in the third quarter.

Furthermore, concerns over the health of triple-AAA Austria and the Netherlands intensified after data showed Austria’s economy shrank 0.1% in the three months to September, while the Dutch economy contracted by an alarming 1.1%. Economists had only expected a decline of 0.2%.

A separate report showed that consumer price inflation in the euro zone held steady at 2.5% in October, unchanged from an initial estimate and in line with expectations.

Core CPI, which excludes food, energy, alcohol, and tobacco costs held steady at 1.5%, unchanged from a preliminary estimate and matching forecasts.

In other news, the pound came under pressure after official data showed that retail sales in the U.K. fell by a seasonally adjusted 0.8% in October, compared to expectations for a 0.1% fall.

The yen also came under selling pressure after Shinzo Abe, the head of Japan's main opposition party and frontrunner in next month's election, called for aggressive monetary easing by the Bank of Japan to support growth.

In latest news, the Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 10.7 in November from 5.7 a month earlier. A reading of zero is the dividing line between expansion and contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Later in the day, the speech by Federal Reserve Chairman Ben Bernanke is to be closely watched for any indications on the future possible direction of monetary policy.

Daily Afternoon Report 14/11/2012 | Forex Trading Analysis

The U.S. dollar rallied against the broadly weaker yen on Wednesday, but turned lower against the euro, as speculation that aid payments for Greece could be bundled into one large lump sum supported the single currency.

The euro remained supported after German newspaper Bild reported Tuesday that Greece could receive three bailout installments in one single payment of EUR44 billion, citing German government sources.

The euro hit session highs against the greenback earlier after Italy saw borrowing costs fall to the lowest level since October 2010 at an auction of three-year government bonds. In addition to that, the Italian 10-year government bonds advanced for a second day as borrowing costs fell as the nation sold 5 billion euros ($6.4 billion) of debt. Italy auctioned 3.5 billion euros of notes due in 2015 and a total of 1.5 billion euros of 2023 and 2029 bonds, the latter being the longest maturity the nation has sold this year.

But concerns that the economic outlook for the euro zone is worsening were underlined after official data showed that industrial production in the bloc tumbled 2.5% in September, compared to expectations for a 1.9% decline.

Meanwhile, the Bank of England’s quarterly inflation report said that it will take until the third quarter of 2014 before inflation will fall below the bank’s 2% target, nine months longer than the bank forecast in August and added that growth looked likely to remain sluggish.

As the Bank of England Governor Mervyn King said, the U.K. economy may shrink in the current quarter and its recovery will be subdued, prompting officials to keep open the option of further asset purchases to aid growth.

Earlier Wednesday, official data showed that the number of people in the U.K. claiming unemployment benefits rose by 10,100 in October, the largest increase since September 2011, but the unemployment rate ticked down to 7.8% from 7.9% in September.

In the U.S., retail sales fell in October for the first time in four months, influenced by the effects of superstorm Sandy, which hurt receipts for some and helped for others. The 0.3 percent drop followed a 1.3 percent increase in September that was larger than previously reported, Commerce Department figures showed today in Washington.

Furthermore, wholesale prices in the U.S. unexpectedly fell in October for the first time in five months as energy and vehicle costs dropped. The 0.2 percent decline in the producer price index came after a 1.1 percent increase the prior month, Labor Department figures showed today in Washington.

Later Wednesday, the Federal Reserve is to publish the minutes of its most recent policy-setting meeting.

Daily Afternoon Report 13/11/2012 | Forex Trading Analysis

The U.S. dollar was steady against the other major currencies on Tuesday, as amid ongoing uncertainty over aid payments to Greece and concerns over the U.S. fiscal cliff.

The euro came off two-month lows against the greenback after German newspaper Bild reported that Greece could receive EUR44 billion of financial aid in one payment, citing German government sources.

Sentiment on the single currency was also boosted after Greece sold EUR4.06 billion of short term government bonds, which should help Athens to repay EUR5 billion of debts maturing on Friday.

But investors remained jittery amid concerns over a delayed bailout payment for Greece as officials from the International Monetary Fund and Europe disagreed on how best to reduce the country’s debt to manageable levels.

A decision on unlocking Greece’s next tranche of aid, worth EUR31.5 billion, has been postponed until 20 November.

The dollar traded slightly lower against the pound, since the pound found some support after official data showed that U.K. consumer prices rose sharply in October, as a result of increases in the cost of food, transport and university fees.

In other U.S. news, the IBD/TIPP Economic Optimism Index declined by 5.4 points, or 10%, in November, posting 48.6 vs. 54 in October. The index is 0.4 points above its 12-month average of 48.2, 4.2 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 1.3 points below its all-time average of 49.9.

Later on, the U.S. is to release official data on the federal budget balance.

Daily Morning Report 09/11/2012 | Forex Trading Analysis

The Australian Dollar is trying a comeback after China's CPI print came at 1.7%, when a 1.9% was the consensus, and 5.5% was the number for Oct last year. Local share markets and SP500 futures are correspondingly having some relief rally after heavy losses in last 2 days.

The Bank of England decided not to increase the asset purchase target in November, although the spending on the stimulus measure is expected to be finished by the end of the month. The asset purchase target was kept at 375 billion Pounds; the interest rate was also kept at 0.50%.

The U.S. trade deficit unexpectedly narrowed in September to its smallest gap since December 2010, as exports rose to a record high. The U.S. Department of Commerce reported that the trade deficit shrank by 5.1 percent to $41.5 billion in September from $43.8 billion in August.

French Finance Minister Moscovici said he expects France to maintain a 0.8% growth target for 2013. He also said that it’s crucial to reach an accord on the Greek debt deal. Greek PM Samaras just accomplished to pass the austerity measure in the Greek parliament; the austerity measure is meant to win the approval for the next round of bailout funds. 

Daily Morning Report 05/11/2012

The Australian Dollar traded slightly higher as Australia’s trade deficit widened for the fifth consecutive month highlighted by flagging exports to all three of its largest trading partners: China, Japan and the U.S.

The Australian Bureau of Statistics reported the flow of goods declined to China by -4 %, Japan by -13% and the U.S. by -21% in September which should continue to be cause for concern by central bankers as an elevated exchange rate and global slowing were recently noted as the biggest headwinds facing the Aussie economy.

US non-farm payrolls on Friday night surpassed pundits expectations of 125,000 with an increase of 171,000 in October US stocks closed lower having been in the red for most of the day. Crude oil and Gold also were sharply lower as the US dollars strength reinforced the selling pressure on them and in turn on US equities tied to energy.

Daily Morning Report 31/10/2012

The dollar softened against most major currencies on Wednesday as investors sold safe-haven dollars they acquired before Sandy, a hurricane that morphed into a post-tropical giant, and continues to dump snow and rain over the northeastern U.S.

While the country continues to assess the damage, investors sold safe-harbor USD and prepped to take up other positions to play clean up and recovery. Markets were closed in the U.S. earlier for a second day, though investors who bought dollars prior to the storm's landfall began to loosen up by Asian trading on Wednesday, selling
their dollars to play recovery, which weakened the USD against its Japanese counterpart.

Elsewhere, Australian building approvals have risen for a second consecutive month in September, putting the chances of an interest rate cut from the Reserve Bank of Australia next week further in doubt. According to the Australian Bureau of Statistics total dwelling units approved increased 7.8 per cent in September, following a 6.4 per cent jump in August. That is a modest recovery from precipitous falls in July, when approvals fell 17.3 per cent. The approvals data is a leading indicator of future construction work, suggesting a return of confidence in the interest-rate sensitive housing sector.

Later Wednesday in the U.S., payroll processing firm ADP is to release a report on nonfarm payrolls, a leading indicator of private-sector job creation while the Canadian Bureau of Statistics is to announce GDP data.

Daily Afternoon Report 30/10/2012

Subsequent to a meeting in Berlin, France Finance Minister Moscovici and http://jobsmoney.blogspot.com/Minister Schaeuble declared that they are aiming for a solution to Greece by November. They both want to see Greece remains in the Euro-zone, and the solution will be discussed more in tomorrow’s Euro-group meeting. Schaeuble refused to comment on the size of the funding gap in Greece, but added that they can’t go in the opposite direction on debt reduction. Moscovici said he doesn’t want to reopen the discussion on Euro bonds.

The amount of people out of work in Germany now totals 2.94 million. The German economy has suffered because of the Euro debt crisis, and the GDP only rose 0.3% in the second quarter. Germany is the largest economy in the Euro and signs of economic suffering are Euro negative in forex markets.

Clearly, the largest story of the day is Hurricane Sandy and its impact on the East Coast of the US. It is appraised that the damages are coming up to 20 billion dollars from the hurricane and US stock markets will remain closed today, the US markets might reopen tomorrow.  

Daily Morning Report 29/10/2012

The dollar traded higher against most major currencies on Monday, as investors snapped up safe-haven USD positions to brace for U.S. unemployment data due out later this week as well as the Bank of Japan's latest decision on interest rates.

The USD was up against the GBP, CAD, NZD, AUD, JPY and CHF in Asian session.

 Fears Greece may run into hurdles securing its next tranche of bailout money sparked the risk-off session as well.

Japan, meanwhile, is to release data on unemployment, household spending and industrial production this week, though investors were keeping a close eye on the Bank of Japan, which will announce its latest decision with interest rates and monetary policy on Tuesday.

Later Monday, the U.S. government plans to issue data on personal income and spending for September on Monday even though the government has shut down to brace for Hurricane Sandy. The Federal Reserve, however, will postpone its regularly scheduled data. The Commerce Department will post the monthly report on consumer spending on its web site at 1230 GMT, as regularly scheduled. In contrast, the Fed said it would wait until the federal government reopens to release its data, including a weekly report on selected interest rates and figures on commercial paper issuance.

Daily Afternoon Report 25/10/2012

Earlier Thursday, the Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.5%, marking Governor Graeme Wheeler's first decision as head of the central bank, after replacing Alan Bollard in late September.

The preliminary release of the UK Q3 GDP came in much stronger than expected causing EUR/GBP to plunge, while GBP/USD rose.

The euro extended its correction versus the dollar after the jobless claims drop as well as the durable goods orders rise to more than expected levels.

Elsewhere, the yen remained broadly weaker amid mounting speculation over the possibility of more easing by the BoJ at its upcoming policy meeting on October 30.

USD CAD Live Chart

German Economic Expectations Fall Again

MANNHEIM--German economic expectations in June fell at the fastest rate in more than a decade, reflecting the view that Greek repeat parliamentary elections only provided a brief respite and that the situation in the euro zone is "still precarious," the Center for European Economic Research, also known as ZEW, said Tuesday.
The economic expectations index fell to -16.9 in June from May's unrevised 10.8. The last time the decline in the indicator was this great was in October 1998. Experts in a poll by Dow Jones Newswires had expected a fall to 2.8 for June.
The widely watched ZEW index fell again in June after improving sharply in recent months. After declining for nine months on the deepening of Europe's sovereign debt crisis, the index turned negative in June after turning positive in February.
ZEW said the decline is a warning that optimism over Germany's economy is still premature as its main trading partners are experiencing an economic downturn.
The current conditions index fell to +33.2 from May's unrevised 44.1. Experts had forecast a reading of 39.0 for June.

IMF Reiterates No Plans to Fund Financing for Spain, Only Monitoring

WASHINGTON--The International Monetary Fund has no plans to provide any financing for Spain, only to take a monitoring role in a EUR100 billion European bailout for the country's banks, an IMF official reiterated Thursday.
But IMF spokesman Gerry Rice repeated that the fund believes Europe should use its emergency bailout funds to take direct stakes in ailing banks as opposed to lending to governments, which then uses the cash to recapitalize banks. Otherwise, Europe risks boosting governments debt burdens and pushing borrowing costs higher.
The IMF's point has been highlighted in recent days as Germany's opposition to use euro funds for bank bailouts has fueled market concerns that Spain's bailout will mean Madrid will be unable to pay its obligations, pushing its borrowing costs to unsustainable levels.
Asked if Europe it's facing its last chance to fix the crisis at two upcoming euro summits in June--as some economists believe-- Mr. Rice said IMF Managing Director Christine Lagarde has repeatedly warned Europe of the urgency of prompt action on a comprehensive crisis plan. The IMF has said the E.U. needs to strengthen the capacity of its bailout funds, spur growth through looser monetary policy and tweaking budget-tightening plans, and creating a banking union.
Mr. Rice also said the IMF would warn world leaders at an upcoming summit of the Group of 20 largest industrialized and developing countries of the downside risks the global economy from a worsening of the euro zone crisis. He said the fund is hoping the G-20 firms up commitments to boost IMF resources, as tentatively promised earlier this year when IMF members pledged to raise more than $430 billion in new lending resources for the fund.
Officials from some key emerging economies, including China and Brazil, have indicated they may delay detailing any possible IMF cash commitments over concerns about the pace of IMF governance reform that would give them greater power within the fund.
Despite those remarks, Mr. Rice said there had been "no backtracking or delay" on new resource commitments, and "it was never expected that the package would be completed with every detail by" the G-20 meeting early next week.
The IMF spokesman also said there had been no request for financial assistance from Cyprus, despite some economist expectations that the country may soon need external financial support. 

U.S. Stocks Turn Positive

Reported earlier: U.S. Stocks Mixed as Market Downplays Economic Data, EuropeBY ALEXANDRA SCAGGSNEW YORK--U.S. stocks erased early-morning losses in choppy trading, shrugging off weak data and worries about Europe.The Dow Jones Industrial Average fell 9 points, or 0.1%, to 12567. The Standard & Poor's 500-stock index was flat, at 1323, and the Nasdaq Composite was up 4 points, or 0.2%, to 2847.U.S. retail sales slipped for the second consecutive month in May, the first string of declines in nearly two years. While the measure fell by less than expected in May, April retail sales were revised downward into negative territory. Businesses held more inventory than expected in April because of sluggish sales.J.P. Morgan Chase & Co. rose 2.3%, and was the fourth-largest gainer in early trading. Chief Executive Jamie Dimon's testimony to the Senate gave the impression the bank wouldn't see crippling fallout from its unexpected $2 billion trading loss."He's appeasing the stock market here, so now we're calm to the fact that J.P. Morgan isn't going to get decimated" by its losses, said Ryan Detrick, chief technical strategist with Schaeffer's Investment Research. "That's led us back a bit."European markets erased early gains to turn mostly lower as worries about Spain's debt and banking crisis festered and investors responded to weak economic data. Euro-zone industrial output was at its weakest level since September 2010 in April.The Stoxx Europe 600 was down 0.3%, after being up 0.4% at its intraday high.Asian markets were mostly higher following Tuesday's U.S. gains, with Japan's Nikkei Stock Average rising 0.6% and China's Shanghai Composite climbing 1.3%.Crude-oil futures slipped 0.2% to $83.46 a barrel, while gold futures rose 0.6% to $1623 an ounce. The U.S. dollar lost ground against the euro and the yen.In corporate news, shares of Dell rose 4.5% after the computer maker said it plans to start paying a quarterly cash dividend of 8 cents a share.Johnson & Johnson gained 1.1%. The blue chip health-care company said it received regulatory clearance to close its $19.7 billion bid for medical-device maker Synthes. Analysts from J.P. Morgan Chase, Jefferies & Co. Inc., and Raymond James Financial subsequently upgraded the stock.Facebook edged up 0.8%, putting it on track to post back-to-back gains for just the second time since going public. The stock rose 1.5% Tuesday to close at a one-and-a-half-week high.Scotts Miracle-Gro dropped 8% after announcing it expects to fall short of estimates of full-year earnings and sales growth it had provided earlier as a result of slowing consumer demand and lower-than-expected margin rates.Printing company 3D Systems fell 5.6% after the company said it is offering shares of its common stock for sale to the public. 

Interbank Foreign Exchange Rates

                           Latest       Previous   %Chg    Daily    Daily   %Chg 
Dollar Rates                               Close            High      Low  12/31 
 
 
USD/JPY Japan            79.49-52       79.43-46  +0.08    79.60    79.18  +3.37 
EUR/USD Euro            1.2494-96      1.2481-83  +0.10   1.2507   1.2452  -3.59 
GBP/USD U.K.            1.5487-92      1.5484-89  +0.02   1.5500   1.5464  -0.34 
USD/CHF Switzerland     0.9612-14      0.9620-24  -0.09   0.9644   0.9604  +2.57 
USD/CAD Canada         1.0297-302      1.0313-18  -0.16   1.0324   1.0296  +0.88 
AUD/USD Australia      0.9898-902      0.9862-66  +0.36   0.9914   0.9852  -3.02 
NZD/USD New Zealand     0.7720-26      0.7688-93  +0.43   0.7726   0.7672  -0.68 
 
Euro Rates 
 
EUR/JPY Japan            99.30-34       99.14-19  +0.16    99.54    98.74  -0.24 
EUR/GBP U.K.            0.8065-68      0.8059-62  +0.07   0.8069   0.8053  -4.61 
EUR/CHF Switzerland     1.2008-12      1.2008-12   0.00   1.2012   1.2010  -1.33 
EUR/CAD Canada          1.2867-74      1.2871-79  -0.04   1.2881   1.2856  -2.73 
EUR/AUD Australia       1.2618-24      1.2649-58  -0.26   1.2653   1.2614  -0.59 
EUR/DKK Denmark         7.4307-44      7.4310-49  -0.01   7.4361   7.4262  -0.04 
EUR/NOK Norway         7.5274-310     7.5439-506  -0.24   7.5489   7.5262  -2.79 
EUR/SEK Sweden         8.8577-648    8.8933-9003  -0.40   8.8982   8.8494  -0.62 
EUR/CZK Czech Rep.      25.609-40     25.584-643  +0.04   25.646   25.592  +0.11 
EUR/HUF Hungary         297.34-86      297.30-97  -0.01   297.68   297.14  -5.55 
EUR/PLN Poland          4.3402-52     4.3470-543  -0.18   4.3558   4.3358  -2.79 
 
Yen Rates 
 
AUD/JPY Australia        78.69-74       78.33-42  +0.43    78.90    78.10  +0.63 
GBP/JPY U.K.            123.11-19      122.98-03  +0.10   123.36   122.59  +3.02 
CAD/JPY Canada           77.16-23       76.98-07  +0.23    77.27    76.77  +2.47 
NZD/JPY New Zealand      61.37-44       61.06-13  +0.51    61.49    60.82  +2.66 
 
Other Dollar Rates 
 
USD/CZK Czech Rep.     20.495-520     20.497-543  -0.06   20.566   20.494  +3.83 
USD/HUF Hungary       237.98-8.38      238.19-70  -0.11   238.85   238.10  -2.04 
USD/DKK Denmark         5.9472-98      5.9537-59  -0.11   5.9692   5.9434  +3.68 
USD/NOK Norway          6.0247-72      6.0440-86  -0.34   6.0511   6.0210  +0.83 
USD/PLZ Poland          3.4738-76      3.4827-82  -0.28   3.4943   3.4718  +0.83 
USD/RUB Russia          32.739-90     32.677-743  +0.17   32.896   32.624  +1.91 
USD/SEK Sweden         7.0894-946      7.1252-98  -0.50   7.1333   7.0810  +3.08 
USD/ZAR S. Africa      8.4208-330     8.4641-758  -0.51   8.4728   8.4200  +4.20 
 
USD/CNY China           6.3715-36      6.3623-44  +0.14   6.3775   6.3732  +0.85 
USD/HKD Hong Kong       7.7587-94      7.7601-09  -0.02   7.7603   7.7586  -0.10 
USD/MYR Malaysia        3.1801-66     3.1663-728  +0.44   3.1847   3.1726  +0.19 
USD/INR India        55.995-6.005     55.610-700  +0.62   56.050   55.673  +5.61 
USD/IDR Indonesia         9421-81         9405-5  +0.49     9421     9430  +4.63 
USD/PHP Philippines  42.851-3.092   42.919-3.020  +0.00   42.879   43.080  -2.00 
USD/SGD Singapore       1.2835-38      1.2860-67  -0.21   1.2868   1.2822  -0.99 
USD/KRW S. Korea    1169.19-71.60   1170.39-2.80  -0.10  1173.39  1168.30  +0.84 
USD/TWD Taiwan          29.919-80     29.899-960  +0.07   29.949   29.950  -1.04 
USD/THB Thailand        31.633-96      31.628-88  +0.02   31.699   31.626  +0.21 
USD/VND Vietnam        20822-1473     20945-1015  +0.80    20822    21473  +0.52 
 
USD/BRR Brazil          2.0567-98      2.0607-72  -0.28   2.0637   2.0588 +10.32 
USD/MXN Mexico        14.0696-842    14.0891-979  -0.12  14.1151  14.0578  +0.94 
USD/ARS Argentina       4.4817-90     4.4859-932  -0.09   4.4897   4.4886  +4.10 
 
Source: ICAP Plc. 
 

2012.06.11 18:50:16 Interbank Foreign Exchange Rates At 14:50 EST / 1850 GMT

                           Latest       Previous   %Chg    Daily    Daily   %Chg 
Dollar Rates                               Close            High      Low  12/31 
 
 
USD/JPY Japan            79.40-44       79.60-65  -0.26    79.72    79.36  +3.26 
EUR/USD Euro            1.2493-96      1.2638-42  -1.15   1.2668   1.2484  -3.59 
GBP/USD U.K.            1.5494-96      1.5509-15  -0.11   1.5581   1.5492  -0.30 
USD/CHF Switzerland     0.9611-16      0.9501-11  +1.13   0.9619   0.9481  +2.57 
USD/CAD Canada          1.0312-14      1.0219-29  +0.87   1.0312   1.0202  +1.01 
AUD/USD Australia       0.9887-88      0.9984-89  -0.99   1.0007   0.9888  -3.15 
NZD/USD New Zealand     0.7710-12      0.7766-74  -0.76   0.7785   0.7710  -0.84 
 
Euro Rates 
 
EUR/JPY Japan            99.20-24      100.55-69  -1.39   100.90    99.20  -0.34 
EUR/GBP U.K.            0.8062-65      0.8146-50  -1.04   0.8157   0.8054  -4.64 
EUR/CHF Switzerland     1.2008-12      1.2010-20  -0.04   1.2018   1.2006  -1.33 
EUR/CAD Canada          1.2884-88      1.2914-31  -0.28   1.2948   1.2845  -2.62 
EUR/AUD Australia       1.2637-40      1.2653-69  -0.18   1.2681   1.2588  -0.45 
EUR/DKK Denmark         7.4311-46     7.4295-353  +0.01   7.4432   7.4196  -0.03 
EUR/NOK Norway         7.5381-436     7.5724-908  -0.54   7.5898   7.5294  -2.64 
EUR/SEK Sweden        8.8929-9006    8.8881-9019  +0.02   8.9125   8.8590  -0.22 
EUR/CZK Czech Rep.     25.563-620     25.264-384  +1.06   25.608   25.302  -0.01 
EUR/HUF Hungary         296.38-98      293.98-05  +0.77   296.86   293.64  -5.84 
EUR/PLN Poland         4.3384-460     4.2755-885  +1.41   4.3455   4.2574  -2.80 
 
Yen Rates 
 
AUD/JPY Australia        78.50-54       79.44-56  -1.23    79.69    78.50  +0.38 
GBP/JPY U.K.            123.02-10      123.45-57  -0.37   124.06   123.04  +2.94 
CAD/JPY Canada         76.98-7.04       77.82-94  -1.11    78.09    77.02  +2.23 
NZD/JPY New Zealand      61.22-27       61.83-92  -1.02    61.97    61.22  +2.39 
 
Other Dollar Rates 
 
USD/CZK Czech Rep.     20.460-504      19.984-20  +2.26   20.486   20.000  +3.70 
USD/HUF Hungary         237.22-66      232.61-03  +1.94   237.53   232.30  -2.34 
USD/DKK Denmark         5.9477-96     5.8785-812  +1.17   5.9536   5.8678  +3.68 
USD/NOK Norway          6.0334-68      5.9902-06  +0.65   6.0401   5.9850  +0.98 
USD/PLZ Poland          3.4725-80     3.3830-925  +2.58   3.4777   3.3668  +0.82 
USD/RUB Russia         32.742-816      31.846-03  +0.41   32.809   31.930  +1.96 
USD/SEK Sweden         7.1177-228     7.0329-417  +1.18   7.1251   7.0134  +3.49 
USD/ZAR S. Africa      8.4557-708     8.3100-488  +1.61   8.4734   8.2634  +4.65 
 
USD/CNY China           6.3575-96      6.3739-60  -0.26   6.3741   6.3464  +0.63 
USD/HKD Hong Kong       7.7603-10      7.7576-82  +0.04   7.7606   7.7576  -0.08 
USD/MYR Malaysia       3.1675-740    3.0754-2020  +1.02   3.1865   3.1646  -0.21 
USD/INR India          55.600-700      55.418-33  +0.41   55.810   55.090  +4.95 
USD/IDR Indonesia        9398-414       9157-525  +0.70     9445     9385  +4.13 
USD/PHP Philippines  42.827-3.068     43.128-368  -0.69   43.229   43.000  -2.06 
USD/SGD Singapore       1.2843-46      1.2740-48  +0.79   1.2844   1.2730  -0.93 
USD/KRW S. Korea     1170.39-2.80  1134.59-82.10  +1.14  1170.99  1165.90  +0.95 
USD/TWD Taiwan         29.889-950     29.889-970  -0.03   29.949   29.900  -1.14 
USD/THB Thailand        31.609-60      30.568-02  +1.39   31.671   31.586  +0.11 
USD/VND Vietnam        20945-1015     20557-1206  +0.47    20960    21000  -0.27 
 
USD/BRR Brazil         2.0437-502     2.0031-432  +1.18   2.0453   2.0192  +9.72 
USD/MXN Mexico         14.0554-86    13.8279-820  +1.46  14.0685  13.8154  +0.80 
USD/ARS Argentina      4.4831-904    4.3559-4826  +1.53   4.4861   4.4730  +4.13 
 
Source: ICAP Plc. 

ECB's Coene: Spain Banking Aid Decision Will Prevent Contagion

By Frances Robinson

BRUSSELS--The decision to provide assistance to Spain's banks will prevent further contagion in the euro zone, a member of the European Central Bank governing council said Monday.

Over the weekend, Spain said it would accept up to 100 billion euros ($125 billion) in guarantees for its troubled banks and is expected to make a formal request for the money this week, although independent assessments of the amounts required will only come towards the end of June.

"What's positive is we've got a mechanism in place that will allow us to isolate the Spanish problem," Luc Coene told reporters. "This risk is now being limited, it's under control, we've got the necessary resources to do that."

Statements about the bailout by Spain and the European Union have left several open questions, including the exact amount of aid the country will need and how the funds will be disbursed.

And while Coene said details needed to be finalized about how the money will flow from the permanent bailout fund--the European Stability Mechanism--to Spain's banks, he advocated taking the best approach according to circumstances.

He also said the funding decision wouldn't affect the European Central Bank's exceptional policy measures, such as the securities markets program of bond-buying, which was designed to improve monetary policy transmission.

"There is no connection between the two things," he said.
Asked if the structure of senior creditors within the ESM could cause problems, Coene replied he "didn't think so."

"ESM debt is senior, but that is not in itself enough to have a credit event," he said, adding that the final details have yet to be confirmed.

"This has nothing to do with ratings, or non-compliance with conditions," he said.
Initial market reaction to the deal shouldn't be over-interpreted as "it's not unusual for markets to fluctuate," he added.

Spanish government bond prices fell Monday, after an initial relief rally as concerns mounted that the deal will load more debt on to the Spanish state and threaten to subordinate bondholders behind official creditors.
Write to Frances Robinson at frances.robinson@dowjones.com

BOE's Posen: Bank of England Should Buy Small Business Loans

  By Jason Douglas 
 

LONDON--The Bank of England should purchase bundles of small business loans in an effort to boost the supply of credit and end an "investors' strike" that is holding back the economy, BOE rate-setter Adam Posen said Monday.

In a reprise of an earlier appeal, Posen said major central banks around the world should engage in a fresh round of stimulus and target their efforts at parts of their economies most in need of official help.
In the U.S., that is the residential mortgage market. In the U.K., it is lending to small businesses, Mr. Posen said, according to a text of his speech.

"The critical gap to be addressed is in lending to small and medium enterprises, and new businesses," he said.
Mr. Posen said risk-aversion among investors is preventing the extra cash pumped into the U.K. economy by the BOE through its asset purchase program from sparking a revival in investment--an investors' strike that monetary policy should seek to bring to an end.

His proposal calls for the BOE to buy small business loans, thereby spurring banks to lend more to small firms in the knowledge the central bank stands ready to snap up those loans.

Mr. Posen first made his proposal in September last year but the idea met resistance from BOE Governor Mervyn King, who argues that only elected lawmakers can risk taxpayers' money on risky loans. The BOE's GBP325 billion asset purchase program has focused almost exclusively on U.K. government bonds, or gilts.
Mr. Posen, who steps down from the Monetary Policy Committee in August to head the Petersen Institute in Washington, a think tank, said those concerns should be assuaged if the government vowed to indemnify the central bank against any losses.

UPDATE: ECB Urges Adoption of Long-Term View in Accounting Practices

By Kathleen Madigan 
 

Economists expect little joy to be found in this week's flurry of reports. The weak readings will give Federal Reserve policy makers much to consider when they meet next week, on June 19 and 20.

Wednesday's retail sales report is expect to show shoppers pulled back in May. The median forecast is that total sales dropped 0.3% in May. Excluding autos, store sales likely slipped 0.1%, in part because of falling prices at gasoline stations.

Forecasters also think the industrial sector downshifted in May, though that followed a large 1.1% jump in April. Industrial production, out Friday, is expected to show a small 0.1% gain last month, and capacity use is expected to remain at 79.2%.

Two early looks at June are also on tap this week. The Empire State survey from the Federal Reserve Bank of New York, scheduled for Friday, is expected to show weakness in June, after a strong showing in May. The business conditions index is projected to slow to 10.7 this month from 17.09 in May.
The preliminary June reading of consumer sentiment, also out Friday, is forecast to drop to 77.0 from the end-May reading of 79.3.

Economists also think falling oil prices brought down top-line inflation in May.
The producer price index, scheduled for Wednesday, is projected to have fallen 0.8% in May, while the core index, which excludes food and energy, is expected to have increased 0.2%.
The median forecast for the consumer price index, due Thursday, is for a 0.3% drop in May, with the core index up 0.2%.

 DATE     TIME  RELEASE              PERIOD  CONSENSUS  PREVIOUS 
          (ET) 
Tuesday   0730  NFIB Small Business    May      94.5       94.5 
          0830  Import Prices          May      -1.1%      -0.5% 
          1400  Federal Budget         May      -$125.0B   -$57.6B* 
Wednesday 0830  Producer Prices        May      -0.8%      -0.2% 
                 -excl food & energy   May      +0.2%      +0.2% 
          0830  Retail Sales           May      -0.3%      +0.1% 
                 -excl autos           May      -0.1%      +0.1% 
          1000  Business Inventories   Apr      +0.3%      +0.3% 
Thursday  0830  Jobless Claims        Jun 9     375K       377K 
          0830  Consumer Prices        May      -0.3%      Unch 
                 -excl food & energy   May      +0.2%      +0.2% 
          0830  Current Acct Balance   1Q       -$134.0B   -$124.1B 
Friday    0830  NY Fed Empire St Svy   Jun      10.7       17.09 
          0915  Industrial Production  May      +0.1%      +1.1% 
          0915  Capacity Utilization   May      79.2%      79.2% 
          0955  Reuters/UMich Consumer 
                  Sentiment (prelim)   Jun      77.0       79.3** 
 
 *May 2011 reading 
 **end-May reading 

Asian Shares, Euro Climb on Spanish Bank Bailout

Asian markets rallied early Monday and the euro jumped higher on Spain's bank bailout, while sentiment was also boosted with Chinese economic data that was less bad than some had feared.

Investors welcomed the weekend news that Spain secured a EUR100 billion ($125 billion) loan to bolster its banking system, which makes the country the fourth and largest euro-zone economy to be rescued by its euro-zone partners.

Along with the forthcoming Greek elections, concerns relating to the health of Spain's banking system have been one of the dominant themes coming out of Europe in recent weeks, and the bailout provided an immediate boost to market sentiment.

"It's tempting to say that with the Spanish aid deal, the worst of the crisis is now behind us," said CLSA equity strategist Nicholas Smith in Tokyo.

Stocks rallied early in the day. Japan's Nikkei climbed 2% and Hong Kong's Hang Seng Index gained 2.1% while South Korea's Kospi was 1.6% higher. Singapore's Strait Times Index rose 1.4% and the China Shanghai Composite was up 0.3%.

In recent sessions, stocks have managed to stage what appears to be a sustained rally, pulling themselves off from the floor. The Nikkei and the Hang Seng Index are 4% and 3.8% respectively above their year-to-date lows. But traders could become cautious again ahead of the Greek election later this week, and markets still have a long way to go before they return to the peaks: the Nikkei remains 15.8% off its year-to-date high, while the Hang Seng is 12.5% lower.

The euro bounced back on the Spanish developments, climbing to $1.2634, compared to $1.2517 late on Friday in New York, and compounding the 0.7% gain it made last week.

The other main development over the weekend was China's economic data for May, which still pointed to a weakening economy, but was not as bad as some expected. China made a surprise cut to interest rates ahead of the data, which was taken as a signal by the market that May's figures were going to be very bad, and was partly to blame for a sell-off on Friday.

The most notable figure was inflation, with growth in the consumer price index much lower than expected, at 3%. This was taken as a positive because it potentially gives Beijing more space for further policy easing.
The improved risk sentiment was reflected in the performance of Asian currencies. The dollar gained to 79.60 yen early in Asia compared to 79.47 yen on Friday. The Australian dollar edged closer to parity with the dollar, at $0.9980, although a holiday in Australia on Monday is expected to keep the trading volume of the currency low.
China data also helped the price of oil, after China's crude imports reached a record high in May, which is probably due to stockpiling and anticipation of increased output after a round of refinery maintenance. Oil was up 2.3% early on Monday, at $85.99 a barrel.

Hong Kong-listed Chinese banks rose on Monday, recovering after heavy selling on Friday as investors became concerned that deregulation could damage the sector's net interest margins. The gains however underperformed the broader market rally: Industrial and Commercial Bank of China regained 1.2% after losing 4.9% on Friday, while China Construction Bank added 0.8%, after a 4% drop at the end of last week.

China Unicom rose 4.6% in Hong Kong, following news that its parent will buy a 4.6% stake in Unicom from Spanish telecoms company Telefonica SA for around EUR1.13 billion.

Also in Hong Kong, Chinese developer Greentown China soared 36.5% after placing new shares and convertible bonds to Wharf. The Hong Kong developer will become Greentown's second-largest shareholder, which analysts believe could provide greater clarity on the company's long-term cash flow management. Wharf however, fell 2.7%.
-Write to Daniel Inman at Daniel.Inman@wsj.com