$1.2930 EUR after German Court Decision

ESM approved; Dutch election; UK jobless claims fall; ILO unemployment rate ticks higher; Eurozone industrial production rises m/m but falls y/y. Market turns to import prices and by the end of the session to RBNZ. Last nights Premium Insights from Ashraf incoude USDJPY, EURUSD, AUDUSD, GBPUSD, Gold and oil. See below for access.

German court rejected complaints against the ECB bond buying plan and backed the ESM bailout fund and the fiscal treaty, MNI reports. The bailout mechanism is therefore constitutional and can start operating after the German president Joachim Gauck signs it into law. Conditions include limiting German exposure to EUR 190 bln without further approval by Bundestag. EU Jean-Claude Juncker has already said the ESM governors will meet 10/8 in Luxemburg. EURUSD initially dropped sharply from 1.2880s to 1.2815 only to explode higher. It currently trades around 1.2930. The upcoming risk event is Dutch parliamentary election. The polls close at 7:00 pm GMT with first unofficial estimates expected shortly after.

UK labor market surprised positively yet again as the jobless claims declined 15K in August from -13.6K in July which is the biggest fall since 6/2010. The data, however, could be skewed due to short term hiring for the Olympics. The claimant count rate remained steady at 4.8% but the ILO unemployment rate ticked higher to 8.1% from 8.0%. GBPUSD continues to push higher trading around 1.6115.

Eurozone industrial production grew 0.6% in July from previous -0.6% m/m but fell additional 2.3% from -2.1% y/y and periphery 10 year yields are only slightly lower, Spanish around 5.62% and Italian around 5.06%.

The US session begins at 8:30 am ET with import prices that are expected to rise 1.4% in August after declining 0.6% in July followed by wholesale inventories that are seen at 0.3% in July from -0.2% in June.

By the end of the session at 5:00 pm the RBNZ will announce its official cash rate decision. Most economists surveyed by Bloomberg expect rates to remain unchanged at 2.50%.

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