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Market View

Euro trade tight ahead of Fed, ECB Meetings and peripheral euro zone bond yields remain calm

Tuesday, July 31, 2012 3:34 AM GMT

  Good Morning ,

- Euro trade tight  ahead of Fed, ECB  Meetings and  peripheral euro zone bond yields remain calm .  

- Asian markets registered gains in the last trading day of July ,  Japan’s Nikkei Stock Average (+0.69%), South Korea’s Kospi (+2.07%), Australia’s S&P/ASX 200 (+0.68%), Hong Kong’s Hang Seng (+0.90%) , Shanghai Composite closed around flat. Futures for the German DAX 30 and the French CAC 40 are signaling a higher open by +0.09% and +0.15%, respectively .

- SNB’s reserve allocation  showed that as of the end of Q2, EUR holdings were 60%, up from 51% in Q1. This suggests that diversification had slowed .

- Peripheral euro zone bond yields remain calm despite Spain returning to negative GDP growth. Spanish 10 year yields near 11 day lows around 6.6%, and Italian ones at 6.15%, highest for last 3 days . Italy and Spain will likely make requests for the activation and intervention of the euro temporary bailout fund (EFSF) on their primary or secondary bond markets in order to bring down their borrowing costs       ( Res. from banking sector)

- In a joint statement, US Treasury Secretary Timothy Geithner and German Finance Minister Wolfgang Schaeuble expressed "confidence" the eurozone could carry out the reforms needed to escape the two and a half year debt crisis.

-  N.P.  Bild   released the results of a new poll on German sentiment on the Euro. It found that 51% thought Germany would do better by leaving the Eurozone with 29% saying Germany would fare worse. In addition, 71% of the respondents said Greece should be expelled from the Eurozone if it could not live up to its austerity commitments. Only one third of Germans still believe Angela Merkel is making the right decisions over the euro zone debt crisis , according to a survey.

- President Barack Obama is well aware that the economy in the US is also about to face continuing "headwinds" as Europe's debt crisis drags on and the 'fiscal cliff' later on the year approaches. On the euro zone and the euro, he remains firm on his belief that they are also irreversible.

-Japan Fin Min Azumi reiterated Japan will take decisive steps if needed on yen, moves are one sided and clearly do not reflect fundamentals. New comment to his statement was, Japan's view on yen's rise does have outside support including the IMF.

- China Premier Wen  said China will take strong measures to ease the downward pressure facing China's economy. Saying China will launch several large projects covering the railway, infrastructure, energy, telecom, finance, public health and education sectors. China Iron and Steel Association reports that industry wide profits fell nearly 96% y/y, but second half output could recover on favorably economic policy

-  AUD/USD remained stronger in the session, testing a high of $1.0538 and a low of $1.0489. Australia private sector credit was a bit slower in June when compared to May but up from the year ago period. Analysts in the country have started to notice a shift in Australia govt yields as the country benefits from safe haven flows.


09:55  EUR German Unemployment Change

09:55  EUR German Unemployment Rate s.a.

10:00  EUR Italian Unemployment Rate s.a.

11:00  EUR Italian CPI - EU Harmonized (YoY)

11:00  EUR Euro-Zone Unemployment Rate

11:00  EUR Euro-Zone Consumer Price Index Estimate (YoY)

14:30  CAD Gross Domestic Product (MoM)

14:30  CAD Industrial Product Price (MoM)

14:30  USD Employment Cost Index

14:30  USD Personal Consumption Expenditure Core (YoY)

14:30 USD Chicago Purchasing Manager

14:30 USD Consumer Confidence



 Have a nice day !

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