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EUR was yesterday's biggest winner...

Wednesday, October 17, 2012 3:53 AM GMT

Good Morning ,


-EUR was yesterday's biggest winner, up 0.646% against USD, as Spanish Bailout Looks Increasingly Likely…

- Spain appeared to soften its stance on seeking financial assistance. A senior Spanish official revealed yesterday that Madrid is considering a request for a line of credit from the EU’s new bailout program. Of course investors, seek more assurance, especially after S&P cut the long term credit rating of 11 Spanish banks, but the perception that Spain is willing to do something is, so far, enough for investors.

- It’s mostly ingrained in the market to “buy the rumor and sell the fact.” The EUR did both yesterday, while besides ‘Spanish increased bailout rumors’, the German ZEW economic sentiment index rose to -11.5 from -18.2 in September.

- Last month had been the first time in five months, or in five releases, that we saw the ZEW sentiment rise. The “new” positive trend has coincided with the ECB’s announcement and willingness to buy unlimited amounts of government debt to help the periphery problem members.

- IMF'S Lagarde: Perfectly legitimate for US Fed to do QE3.

- Rumors that Germany is open to precautionary credit line for Spain according to CDU lawmakers, also added to the risk boost

- Italian debt management chief Cannata: Foreign investors are returning to Italian debt.

- Merkel: Will Boost EMU by Stimulating Domestic Economy

- Schaeuble: Must Make Bigger Steps Towards Fiscal Union

- Greece Plans to Launch Privatisation of "Significant Assets"

- U.S. TREASURY: Treasuries decline amid growing Spain bailout optimism. 10-year note yield climbs 5 bps to 1.713%.

- Italian 10-year bonds extend advance; yield drops 7 bps to 4.90%. Spanish 10-year bonds extend gain; yield drops 9 bps to 5.72%.

- Talks between the European Troika and Greek ministers have broken down, according to sources. Greece's labor minister and international lenders briefly suspended talks on austerity cuts on Tuesday to confer with their leaders on the thorny issue of labor reforms, which raised objections among government coalition partners.

- Merkel : Can't rush EU banking supervision; quality before speed needed. Also, told Lawmakers she rejects shared liability proposals.

- SNB's diversification out of euro unlikely to stop. The Swiss National Bank is buying fewer euros to enforce its currency policy, but diversification of its reserves out of the euro and into the Australian dollar, British pound and Swedish crown is unlikely to stop.

- Euro destroying EU, and Germany should save it, George Soros said. The European Union could be destroyed by the "nightmare" euro crisis, and Germany needs to take the responsibility to save the common currency, billionaire fund manager George Soros said on Monday Soros.

- National Economic Council director Sperling: U.S. economy is showing 'signs of healing'. 'Long way to go' for unemployment-rate decline.

- IMF's Thomsen: significant progress made on Greek talks, and reached agreement on most policy issues.

- Rajoy Delay Marks Bet on Turmoil Making Bailout Terms Easier. In Rajoy’s thinking, “the worse it gets, the better for Spain,” said Jose Garcia-Montalvo, a former Harvard University economist. Professor says that, Spanish Prime Minister bets that another bout of market turmoil will enable him to broker better terms over German resistance. ‘But… it’s a very risky strategy’…

- USD/CAD Surged after Carney’s Dovish Statements

- The Loonie Suffers as the Bank of Canada Takes it’s Foot Off the Pedal…CAD$, widely known as ‘loonie’, had managed to escape weak Chinese data and slowing global growth prospects last year, due on the expectation that – eventually – the BOC would hike rates. That was until yesterday... Omitting the hawkish talk of past public appearances, Carney effectively pushed the hike rate expectations even further back and the market responded in kind by selling the loonie off sharply.

- Moody's Investors Service has today confirmed the Kingdom of Spain's Baa3 government bond rating and assigned a negative outlook to the rating.

- Japan stimulus plan may require deficit bonds, Nikkei says. Also said that, Bank of Japan supplies $711M for growth lending, Nikkei says.

- Japan PM plans new economic stimulus by end Nov – Kyodo. Japanese Prime Minister Yoshihiko Noda plans a new round of economic stimulus by the end of next month as the country has entered a lull, Kyodo News reported, quoting sources close to the prime minister.


Have a nice day !

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