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To: ild who wrote (245515)	6/13/2003 10:53:32 AM
From: Haim R. Branisteanu	Respond to of 436258

Euro in check as ECB cools down easing talk A combination of ECB remarks dampening talk of a looming rate cut and concerns with Germany's fiscal affairs prevented the euro from extending beyond the 1.18 level. French provisional May CPI ended flat on the month and rose +1.8% y/y while the April trade surplus rose to 591 mln euros from 122 mln euros. Meanwhile, Q1 non-farm payrolls fell 0.3% to a revised 15,449,300 In a reference to the recent chorus of comments from the ECB dampening chances of another interest rate cut, ECB Governing Board member Domingo Solans said the central bank is dampening rate cut talk because it has already cut last week . From his part, ECB's Welteke did talk about the potential benefits of the weakening dollar on the US trade gap but that the impact should not be overestimated given the US deficit with Asia. Germany's precarious budget position is drawing more attention after credit agency Fitch said it would conclude a contentious rating review on Germany shortly. Meanwhile, German Economics minister kep the fiscal rules up in the shelf after indicating there was need to discuss the stability pact during a period of weak growth. France Finance Minister Mer said the speed of euro's rise vs dollar was inconvenient while predicting European growth would be mediocre in Q2 due to war impact. The comments from Mr. Mer on the euro rise stand in contrast to Mer's US counterpart Snow describing the dollar's decline as orderly. The differences in comments tell the unfolding story of two nations' views on their diverging currencies. Should the differences in views and currencies persist, then markets could start interpreting the divergence in opinions as the beginning of a competitive devaluations war-a battle that is uneven due to the lack of currency policy control in the case of France and the rest of the Eurozone. Meanwhile, German Finance Minister Eichel reiterated he is not thinking of resigning.

To: ild who wrote (245515)	6/14/2003 11:43:52 PM
From: Haim R. Branisteanu	Respond to of 436258

The European version to fight deflation - ECB Knows How to Act in Case of Deflation, Issing Tells Spiegel June 14 (Bloomberg) -- The European Central Bank is prepared for the eventuality of deflation in the economy of the 12 euro nations, its chief economist Otmar Issing said in an interview with Der Spiegel, adding that he sees no risk of a long period of falling prices. The bank can't directly provide governments with credit, though it would be able to buy securities on secondary markets if deflation were to emerge, Der Spiegel cited Issing as saying in an advance copy of an article to appear in its next edition. Unlike the U.S. Federal Reserve, the ECB doesn't release any studies on what it would do in hypothetical situations, Issing told the paper. ``We take risks seriously, when there's something to them,'' Spiegel quoted Issing as saying. ``But central banks don't act on suspicion.'' The ECB this week lowered its forecast for economic growth and said inflation may slow next year to as low as 0.7 percent, boosting expectations for another reduction in interest rates before the end of the year. (Der Spiegel 6-14 release)