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• Yen.. the most hated currency in the world…
• Spanish auction result
• UK Data: Oct Mortgage Lending Rises 4.2% On Year Ago – CML
• Update: BOJ’s Shirakawa Calls Abe’s 3% CPI Target Unrealistic
• ECB’s Costa: “We are going through a difficult period”
• EUR/USD slips back slightly
• BOJ’s Shirakawa Calls Abe’s 3% Inflation Target Unrealistic
• Spain goes to the well this morning
• RBA Gov Stevens: Talk of end of mining boom ‘somewhat overhyped’
• Moody’s says would downgrade France further if deterioration in economic prospects or difficulty in implementing announced reforms
• Proposal Could Limit ECB Bank Supervisory Power: Press
• Germany’s Govt Willing To Bolster Greek Aid Package: Press
• Today’s orderboard
• BOJ Gov Shirakawa: Want people to respect BOJ’s independence
• EUR/USD poll-time!!
• French FinMin: Hopes and wants a Eurogroup agreement on Greek debt on Tuesday
• GERMANY DATA: October PPI unch m/m, +1.5% y/y; +1.7%.
• Spain woos foreigners to thin its inventory of unsold houses
• Today’s option expiries
• Morgan Stanley says yen is ‘main short’ in FX outlook for 2013

Yen.. the most hated currency in the world… Posted: 20 Nov 2012 02:01 AM PST Jim O’Neill’s just one of a growing band of JPY bears along with Morgan Stanley; and according to the CFTC traders have now gone net short of the yen for the first time since the spring of this year.. More .. Business Insider

Spanish auction result Posted: 20 Nov 2012 01:54 AM PST Sold a total of Eur4.938 bln in 12 and 18 mth Letra’s out of a targeted Eur 3.5-4.5 bln Sold Eur4.225 bln  of  22 Nov 2013 letra, yield 2.797% (from 2.823), cover 2.12 (from 2.71) Sold Eur 0.713 bln of 16 Apr 2014 letra, yield 3.034 % (from 3.022), cover 5.72 (from 3.04) Above target take up… EUR’s steady around 1.2796

UK Data: Oct Mortgage Lending Rises 4.2% On Year Ago – CML Posted: 20 Nov 2012 01:50 AM PST LONDON (MNI) – Mortgage lending picked up in October, adding to the evidence that the Bank of England’s Funding for Lending Scheme has given the housing market a boost. Council of Mortgage Lenders data showed gross, unadjusted mortgage lending rose to stg12.9 billion in October from stg11.39 billion in September and was up 4.2% from the stg12.377 billion recorded in October last year. The stg12.9 billion outturn was the highest since November 2011. “House purchase and remortgage activity both appear to have picked up recently, and this should be supported by an improvement in the availability and pricing of mortgage,” CML chief economist Bob Pannell said. “The Funding for Lending Scheme is likely to have made an early positive impact, helping to counter some of the negative pressures associated with a protracted and weak economic recovery,” he added. The FLS, designed to boost bank lending by lowering the cost of funding, was activated in Augusted and the BOE’s Quoted Rates data do show rates have fallen on fixed rate mortgages. Senior BOE official Andrew Bailey said Monday, when asked about the FLS during an evidence session at a parliamentary committee, that the evidence “would indicate that there is more sign of activity on the mortgage side than there is on the corporate lending side”. -London bureau: +4420 7862 7491; email: drobinson@marketnews.com [TOPICS: M$B$$$,MABDS$]

Update: BOJ’s Shirakawa Calls Abe’s 3% CPI Target Unrealistic Posted: 20 Nov 2012 01:30 AM PST — Adds Quotes, Background From 16th Paragraph TOKYO (MNI) – Bank of Japan Governor Masaaki Shirakawa said on Tuesday that targeting 3% annual inflation would be “unrealistic” in Japan where the average year-on-year rise in consumer prices in the past few decades has been lower than in other advanced economies. Repeating his warning, he also told reporters that financing of fiscal needs by central banks through underwriting of government debt would cause an unwanted rise in long-term interest rates, pushing up borrowing costs. Joint efforts by the BOJ to continue monetary easing and the government to implement deregulation will help boost Japan’s economic growth potential, Shirakawa told reporters after the BOJ’s two-day policy meeting. If the economy regains vitality, “the possibility will also rise that the rate of increase in CPI will go above 1%,” he said. But for the time being the BOJ’s interim target is to seek 1% inflation — below 2% and clearly above zero, he added. “It is important for the BOJ to conduct bold monetary easing and we are aware of it, and we review our desirable price goal once a year,” Shirakawa said. The governor declined to make direct comment on recent remarks by opposition party leader Shinzo Abe, but speaking in general terms, he said, “My answer is it’s not realistic.” The average year-on-year rise in Japan’s CPI was only 1.3% even during the second half of the 1980s and at the peak of the asset bubble, the annual inflation rate was below 1%, he said. Abe, who is touted as a top contender to the premiership after the Dec. 16 parliamentary elections, said on the weekend that he would consider making the Bank of Japan buy construction bonds directly from the government, not through financial markets. In an unofficial election campaign, he also said last week that he might propose revising the Bank of Japan Act in order to give the government more control over monetary policy. The right-wing politician, who has recently returned to head the main opposition Liberal Democratic Party after giving up his premiership five years ago due to poor heath, is also calling for “unlimited” monetary easing by the BOJ and a reduction in the policy rate to zero or below zero from the current range of zero to 0.1%. Shirakawa brushed off Abe’s call for underwriting construction bonds to be issued for financing public works spending, saying that the BOJ has already been buying large amounts of JGBs, and even that could be interpreted as financing fiscal needs. “The BOJ continues conducting monetary policy in an aggressive manner. If the BOJ’s JGB buying were misunderstood as fiscal financing, it would cause long-term interest rates to rise and would have adverse effects on the real economy,” he said. Earlier on Tuesday, the BOJ’s policy board voted unanimously, as expected, to maintain practically zero short-term interest rates and left the scale of its financial asset-buying fund at Y91 trillion after raising from Y80 trillion on Oct. 30. The BOJ also has left its target for the overnight interest rate among commercial banks at zero to 0.1% since October 2010, when it lowered it from 0.1% as part of “comprehensive monetary easing.” Shirakawa also noted that the Public Finance Law prohibits the central bank from underwriting government bonds. “Generally speaking, the BOJ has been buying large amounts of JGBs. Underwriting of government bonds has never been conducted in advanced nations or developing countries.” He added that the International Monetary Fund also ranks government bond underwriting by central banks high on the list of measures that should be avoided. Shirakawa also rejected the idea of applying negative interest rates to savings and loans. “If interest rates were lowed to zero or into negative territory, a sense of security among market participants about being able to raise funds anytime would disappear. Once the economy receives a shock, it could cause anxiety about liquidity,” he explained. “Negative interest rates would also increase banks’ funding costs, which would prompt them to pass higher costs onto their lending rates. That would eventually make the financial environment tighter.” Shirakawa also said negative interest rates would reduce banks’ incentive to participate in the BOJ’s daily funding operations. The BOJ aims to create the most appropriate financial environment, based on the prospects for economic activity and prices, he said. The governor also said central bank independence must be maintained for sustained economic growth with price stability. Monetary policy plays the role of a warning system against excessive economic activity, he added. As part of its election campaign platform, the opposition LDP decided on Monday to include a review of the BOJ Act, which was last revised in 1998 to enhance central bank independence. Since the BOJ Act is a fundamental law, if Japan were to review it, it should spend sufficient time and give it careful consideration, Shirakawa said. In response to some politicians’ call on the BOJ to inject massive liquidity into the financial system in order to beat deflation, he said the BOJ has already added large amounts of cash. “There is a shared view among advanced economies that it is more important to conduct a policy designed to speed up the circulation of money than focus on the amount of money supplied,” he said. –email: hinoue@mni-news.com –email: msato@mni-news.com [TOPICS: MMJBJ$,M$A$$$,M$J$$$,MT$$$$,MGJ$$$]

ECB’s Costa: “We are going through a difficult period” Posted: 20 Nov 2012 01:27 AM PST Nobody doubts that….

EUR/USD slips back slightly Posted: 20 Nov 2012 01:04 AM PST Back at 1.2785. UK clearer said to have been notable seller in this latest little setback. We’re hardly changed on the day in lacklustre trade (well I think it’s lacklustre) Buy orders clustered down at 1.2750/60, sell stops through there and more through 1.2740. Unless we approach 1.2740 I ain’t gonna get excited. Personally think the euro has help up relatively well in the wake of Moody’s French downgrade and subsequent comments this morning.  But what do I know

BOJ’s Shirakawa Calls Abe’s 3% Inflation Target Unrealistic Posted: 20 Nov 2012 12:40 AM PST TOKYO (MNI) – Bank of Japan Governor Masaaki Shirakawa said on Tuesday that targeting 3% annual inflation would be “unrealistic” in Japan where the average year-on-year rise in consumer prices in the past few decades has been lower than in other advanced economies. Repeating his warning, he also told reporters that financing of fiscal needs by central banks through underwriting of government debt would cause an unwanted rise in long-term interest rates, pushing up borrowing costs. Joint efforts by the BOJ to continue monetary easing and the government to implement deregulation will help boost Japan’s economic growth potential, Shirakawa told reporters after the BOJ’s two-day policy meeting. If the economy regains vitality, “the possibility will also rise that the rate of increase in CPI will go above 1%,” he said. But for the time being the BOJ’s interim target is to seek 1% inflation – below 2% and clearly above zero, he added. “It is important for the BOJ to conduct bold monetary easing and we are aware of it, and we review a desirable price goal once a year,” Shirakawa said. The governor declined to make direct comment on recent remarks by opposition party leader Shinzo Abe, but speaking in general terms, he said, “My answer is it’s not realistic.” The average year-on-year rise in Japan’s CPI was only 1.3% even during the second half of the 1980s and at the peak of the asset bubble, the annual inflation rate was below 1%, he said. Abe, who is touted as a top contender to the premiership after the Dec. 16 parliamentary elections, said on the weekend that he would consider making the Bank of Japan buy construction bonds directly from the government, not through financial markets. In an unofficial election campaign, he also said last week that he might propose revising the Bank of Japan Act in order to give the government more control over monetary policy. The right-wing politician, who has recently returned to head the main opposition Liberal Democratic Party after giving up his premiership five years ago due to poor heath, is also calling for “unlimited” monetary easing by the BOJ and a reduction in the policy rate to zero or below zero from the current range of zero to 0.1%. Shirakawa brushed off Abe’s call for underwriting construction bonds to be issued for financing public works spending, saying that the BOJ has already been buying large amounts of JGBs, and even that could be interpreted as financing fiscal needs. “The BOJ continues conducting monetary policy in an aggressive manner. If the BOJ’s JGB buying were misunderstood as fiscal financing, it would cause long-term interest rates to rise and would have adverse effects on the real economy,” he said. Earlier on Tuesday, the BOJ’s policy board voted unanimously, as expected, to maintain practically zero short-term interest rates and left the scale of its financial asset-buying fund at Y91 trillion after raising from Y80 trillion on Oct. 30. The BOJ also has left its target for the overnight interest rate among commercial banks at zero to 0.1% since October 2010, when it lowered it from 0.1% as part of “comprehensive monetary easing.” –email: hinoue@mni-news.com –email: msato@mni-news.com [TOPICS: MMJBJ$,M$A$$$,M$J$$$,MGJ$$$]

Spain goes to the well this morning Posted: 20 Nov 2012 12:16 AM PST To issue new 12 month letra maturing November 22 2013. Also to re-open 18 month letra maturing April 16 2014. Target amount 3.5-4.5 bln Results due around 9:40 GMT

RBA Gov Stevens: Talk of end of mining boom ‘somewhat overhyped’ Posted: 20 Nov 2012 12:15 AM PST Next phase of mining boom has begun in the case of iron ore, but still some way to go for Gas Terms of trade have peaked, will probably fall by around 15% next year Chinese slowdown more material than expected a year ago, but not ‘disastrously so’ Expect domestic consumption to grow in line with income Surprised AUD still so high given that ‘Terms of Trade’ peaked a year ago Pre conditions for a pick up in housing construction coming into place Board feels further easing may be necessary  over time Latest inflation readings are a bit  high, but not a major problem Encouraging pick up in productivity, but too early to conclude a new trend World will have to live with Eurozone anxiety for several years AUD’s fairly static around 1.0408 after the mildly upbeat comments

Moody’s says would downgrade France further if deterioration in economic prospects or difficulty in implementing announced reforms Posted: 20 Nov 2012 12:02 AM PST Mon Dieu!!!!! Would downgrade France further if substantial economic or financial shock from euro zone crisis Moody’s analyst France’s 2013 budget, medium-term fiscal plan based on optimistic growth forecast France’s 2013 budget, competitveness pact “significant steps”, helped limit size of downgrade (well that’s gotta make ya feel betta)

Proposal Could Limit ECB Bank Supervisory Power: Press Posted: 20 Nov 2012 12:00 AM PST FRANKFURT (MNI) – Current EU presidency holder Cyprus has drawn up a proposal that would give more rights to EU states inside and outside an eventual banking union, limiting the European Central Bank’s power and giving more influence to those nations with bigger banking sectors or larger populations, the Financial Times reported on Tuesday. Citing the leaked text, the FT added that the proposal still would allow the single supervisor legal authority over all 6,000 Eurozone banks, a point that is likely to put it at odds with Berlin, which insists that only larger banks be covered. Other options under discussion include ways for non-Eurozone banking union members to ignore ECB decisions if the central bank’s Governing Council were to overrule proposals by the banking supervisory board; the ability to tighten bank lending rules without prior ECB permission; and the possibility of giving non-Eurozone members more influence within the European Banking Authority, so that the ECB would not dominate voting on technical rules, the FT said. Earlier this week, Bundesbank President Jens Weidmann called for countries taking on greater financial risks to be given a larger say in bank supervisory decisions. “Given that such decisions also could entail fiscal costs, a voting weight based on capital shares would make sense,” he said. With the Cypriot proposal requiring approval by all members, it is uncertain whether sufficient backing could be obtained, the FT said. The business daily also noted the potential concerns of smaller countries and some European officials that changing voting weights to favor larger states could mean that national agendas would hamstring the single supervisor. – Frankfurt bureau: +49 69 720 142; e-mail: twailoo@mni-news.com [TOPICS: MT$$$$,M$$CR$,M$X$$$,M$$EC$]

Germany’s Govt Willing To Bolster Greek Aid Package: Press Posted: 20 Nov 2012 12:00 AM PST BERLIN (MNI) – Germany’s CDU/CSU-FDP government coalition is willing to grant Greece another E14 billion until 2014 on top of the existing rescue package, the German daily Bild reported Tuesday, citing coalition members. A Greek debt default has to be avoided by all means, the paper cited the coalition sources as saying. Lowering interest rates on the rescue loans to Greece is also being discussed, Bild said. European Central Bank Executive Board member Joerg Asmussen said Sunday that Greece is likely to need a third bailout program, since expectations that the country can regain access to capital markets by 2015/2016 appear unrealistic. –Berlin bureau: +49-30-22 62 05 80; email: twidder@mni-news.com [TOPICS: M$X$$$,MGX$$$,M$G$$$,M$$CR$,M$Y$$$,MT$$$$]

Today’s orderboard Posted: 19 Nov 2012 11:58 PM PST EUR/USD:  Bids 1.2750/60 sell stops below 1.2750 and 1.2740 ahead of bids 1.2695/2710 from funds/ real money/ sovereigns, sell stops below and through 1.2680, ahead of 100 day MA at 1.2650 .Offers 1.2830/50 (31.8% Oct17 –Nov 13 fall 1.2842) and 1.2880/00 GBP/USD:   Bids 1.5880/90 and bids/ tech 1.5850/60 (200 day MA at 1.5852), more 1.5800/10 and tech supp 1.5790 (50% fibo of June-Sept rally) sell stops below . Offers 1.5915/25 possible buy stops just above, ahead of tech res 1.5935/40 (Tenkan line 1.5936) and 1.5950/60, , larger up at 1.6000/10 (kijun line 1.6003) EUR/GBP:  Offers 0.8055/65, buy stops above ahead of stronger offers 0.8080/8100.  (200 day MA at 0.8079).  Bids 0.8025/35 and tech supp/options at 0.8000/10, sell stops just below ahead of more bids 0.7985/95 and at 0.7960/70. (0.7964 100 day MA). USD/JPY:  Bids 80.90/81.10, sell stops through 80.90 ahead of more bids  80.50/60. Sell stops through 80.400 ahead of bids again 80.25/35 (tenkan line 80.27), more sell stops through 80.20 and 80.00. Offers start 81.30/50 from exporters (Apr 27 highs 81.45, 61.8% fib retracement at 81.50). Tech res above 81.70/80 (81.75 and 82.00 barriers), buy stops through 82.00 EUR/JPY:   Offers 104.10/30 buy stops above  just above ahead of tech res 104.55/60 ( 104.58 Oct 23 high). Bids 103.50/70 and larger down around 103.00/10 sell stops just below ahead of more bids 102.40/50 AUD/JPY:   Bids 84.40/50 and 84.10/20, sell stops through 84.00.  Offers 84.70/80 buy stops through 84.90 with larger on a break of 85.20 (85.18  Apr 6 high) AUD/USD:   Offers 1.0430/50, some buy stops through 1.0460 and 1.0480. More offers 1.0500/20. Bids 1.0380/00  from sovereigns, real money(1.0387 daily cloud top) ahead of tech supp 1.0371 (100 day MA). Sell stops through 1.0370 ahead of larger bids 1.0350/60 and tech supp 1.0318 (200 day MA) EUR/AUD:  Offers 1.2300/10 1.2345/55 and 1.2380/00. Bids/tech 1.2275/85 (Tenkan line), likely sell stops  through 1.2260 ahead of better support 1.2195/2210 (1.2197 100 day MA)

BOJ Gov Shirakawa: Want people to respect BOJ’s independence Posted: 19 Nov 2012 11:44 PM PST Good Luck with that one pumpkin Seeking 3% inflation in Japan is unrealistic (that’s what I’ve been sayin) BOJ already buying massive amount of JGBs History shows importance of maintaining a central bank’s independence BOJ underwriting govt debt would lead to reckless money printing No central bank of advanced economies underwrites govt debt Sees no need to change economic scenario in outlook report Setting negative rates could discourage banks from seeking funds from BOJ in market operations Japan economy still on track to recover due to expected rebound in overseas economies Bond yields may spike, hurt economy if BOJ’s JGB buying is interpreted as debt monetisation Japan domestic demand likely to improve as overseas economies recover BOJ will continue to seek ways to revive growth but structural reforms to boost economy’s potential also important Any debate on revising BOJ law must be done with caution, spending good amount of time Must monitor if fallout from Japan-China tensions will worsen

EUR/USD poll-time!! Posted: 19 Nov 2012 11:33 PM PST We’re at 1.2800 What’ll we see first, 1.2700 or 1.2900? Reason/s for choice welcome, but not obligatory.

French FinMin: Hopes and wants a Eurogroup agreement on Greek debt on Tuesday Posted: 19 Nov 2012 11:19 PM PST You are not alone pumpkin….. Moody’s downgrade does not put into question France’s economic fundamental’s, government’s reforms Disagrees with Moody’s analysis on banking sector, says French banks are solid

GERMANY DATA: October PPI unch m/m, +1.5% y/y; +1.7%. Posted: 19 Nov 2012 11:10 PM PST GERMANY DATA: October PPI unch m/m, +1.5% y/y; September +1.7% y/y;August +1.6% – Germany October PPI below MNI median fcasts (+0.1%/+1.7%) – Germany October PPI ex-energy +0.1% m/m, +1.3% y/y; September +1.1% y/y – Germany October PPI ex-petroleum products +0.1% m/m, +1.1% y/y – Germany October PPI energy -0.1% m/m, +1.9% y/y; September +0.4%/+3.1% – Germany October PPI cap goods +0.1% m/m, +1.0% y/y; September +1.0% y/y – Germany October PPI cons goods +0.3% m/m, +2.3% y/y; September +2.4% y/y – Germany October PPI basic goods -0.1% m/m, +0.9% y/y;September +0.3% y/y – See MNI’s Mainwire for more details

Spain woos foreigners to thin its inventory of unsold houses Posted: 19 Nov 2012 11:00 PM PST Worth a try, I guess.

Today’s option expiries Posted: 19 Nov 2012 11:00 PM PST For the 20th Nov 2012- 1000 NY/1500 GMT cut: EUR/USD: 1.2700, 1.2750, 1.2800, 1.2825 USD/JPY: 80.50, 81.00 GBP/USD: 1.5900 AUD/USD: 1.0250-1.0650(DNT), 1.0360 AUD/JPY: 85.85 EUR/SEK: 8.7000

Morgan Stanley says yen is ‘main short’ in FX outlook for 2013 Posted: 19 Nov 2012 10:38 PM PST Bloomberg reporting. Fill ya boots Morgan Stanley sees yen fall to 90 per dollar by Q4 2013

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