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Investors focusing on whether the U.S. Federal Reserve will adopt further monetary stimulus to support the economy's recovery

Wednesday, June 20, 2012 3:44 AM GMT

Good Morning ,

- Asian stocks rose to a one-month high and the won strengthened for a sixth
day after data showed Japanese imports soared last month and before the
Federal Reserve announces whether it will take new steps to boost the
economy. The euro and oil declined.

- The euro eased versus the dollar but clung to much of the previous day's
gains on Wednesday, with investors focusing on whether the U.S. Federal
Reserve will adopt further monetary stimulus to support the economy's
recovery. The euro also gained some support from signs that Greek parties may
be close to forming a coalition government, and as Spanish government bonds
gained a bit of respite on Tuesday after a recent sell-off

- Europe won support from world leaders on Tuesday for an ambitious but
slow-moving overhaul of the euro zone, even as pressure built in financial
markets for quicker solutions to its debt crisis that threatens the world
economy. Europe told a Group of 20 summit it intends to work on concrete
steps to integrate its banking sectors, a major step long pressed by the
United States and other nations to break the cycle of debt-laden countries
bailing out their troubled banks which only pushes governments ever deeper
into debt. U.S. President Barack Obama said the sense of urgency amongst
European leaders was clear and they knew what steps were needed to "break the
fever" of an escalating debt crisis.

- International Monetary Fund chief Christine Lagarde hailed the progress
saying "the seeds of a pan-European recovery plan were planted."
"It doesn't matter if it takes a long time, it has got to be done well," she
said, adding that immediate measures and longer-term ones must be pursued in
parallel.

- G20 leaders now await a European Union summit next week where European
officials say they will launch the long process of deeper integration,
starting with a push for banking union, with an aim of finalizing a broad
plan by December.

- Greek conservatives hope to form a coalition government today which
must persuade mistrustful foreign lenders to allow more leeway in pushing
through a deeply unpopular austerity programme. Exasperated with Greece's
repeated failure to honor its promises on budget cuts and reform, euro zone
officials have nevertheless begun to accept the programme may be impossible
to implement without changes, as the country is already off track and its
economy is sliding deeper into recession.

- US Geithner encouraged by what he heard from EU leaders, next week's EU
summit crucial

- French President Hollande said that Italy's idea(use of ESM to buy debt)
worth looking at. Expects EU countries to adopt financial transaction tax next
year. Wants all of Europe's tools, including ECB,to be used to fight crisis.
Opines more time for Greece to meet targets would mean more EU money, need to
explore other options.

- German officials deny that discussions were made at G20 to use ESM funds to
buy EZ bonds

- Germany softens stance against using ESM funds to directly buy distressed
bonds

- Moody's due to issue report on Spanish banks next week following sovereign
downgrade

- Cyprus is said to face EU pressure for an aid programme of EUR10bn

- Japan May trade balance stood at a deficit of JPY 907.3 bn, wider than
expect. compared with JPY 522 bn in April. May exports and imports rose
10% yy and 9.3% yy, most since Dec 2010

- Minutes of BOJ Policy Meeting (May 22nd & 23rd): Members worried European
debt problem was a risk that should be of the most concern. Few members
opined Japan's economy would be adversely affected if Europe's crisis
worsens. They added the BOJ should therefore stand ready to take appropriate
actions without ruling out any options in advance. One member worried that
BOJ overlooked that fact that structural factors influenced Japan's deflation,
and responded to short-term price developments.Members reiterated credibility
of fiscal sustainability should be maintained.

- Australia Q1 dwelling commencements slump by further 12.6% qq

- Australia April leading index suggest economic growth will grind to a halt in
the second half of 2012

- New Zealand PM Key said that the govt. would like to see more competitive NZD
against the dollar. Adds the govt. doesn't believe it can influence the NZD's
move against the USD through intervention.

- NZ Q1 current account deficit widens out to a larger than expected 4.8% GDP
vs 4.2% in Q4

- China pledged USD 43bn to IMF's crisis-fighting fund

Today's Figures
08.00 GE Producer prices mm and yy
09.00 SW Manuf/cons. confidence
10.30 UK Jobless claims change
10.30 UK ILO unemployment rate
10.30 UK Bank of England Minutes

10.30 UK Avg. earnings
11.00 CH ZEW investor sentiment
13.00 US Mortgage market index
18.30 US FOMC rate decision

 (CET)

Have a good day !

 

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