Morning Meeting 30/07/12

Good Morning.

During all the weekend I was thinking: when was the last time that all European politicians were showing this unity of intension? and I was not able to recall when…

The head of the Eurogroup, Jean Claude Junker during the weekend, in a pre-interview to be published by Sueddeutsche Zeitung said the countries sharing the common currency, their rescue fund and the ECB will soon act to save the euro; highlighting the first step to be taken such as the implementation of last EU summit resolution:

• The EFSF and the ECB wil buy spanish government bond to bring down yields.

The German daily newspaper quoted Junker as saying :”The euro countries have reached a point at which we have to make clear with all available means that we are strongly determined to ensure the financial stability of the currency union.”

The union of intentions by Eu politicians and the hopes in a new round of stimulus by the Fed sparkle another round of buying in Asia, despite Japanese macroeconomic data that have failed to meet expectations:

• Japan's industrial output falls unexpected 0.1% on month in June. Fall-off comes amid slowing demand in global economy, hitting Japan's export-oriented manufacturers.Slowdown in the auto sector contributes to the fall. Marketwatch reports.

Nikkei rose 0.53% to 8,612.53, Hang Seng Index jumped 1.52% while Shanghai Composite moved  against the trend, edging down 0.13% to 2125.95.  The euro fell 0.28% versus the greenback to 1.2288$, well below a three-week high of 1.2390% touched on Friday.

Reuters reported that “Data on Friday showed that in the latest week, speculators cut their bets for the euro's further decline and reduced their long bets on the U.S. dollar to the lowest in 2-1/2 months. They also raised their longs on the Australian dollar and the yen.”

QE trades were driving higher commodities prices such as Gold up 0.14% to 1,625$ and Oil (Wti) up 0.45% to 90.54$.

My question now is: Is it possible that investors world wide are losing sight?

There are to many questions which are waiting to be answered: such as the Greek hazard.

“On Greece, European policymakers are working on options that may include having the ECB and national central banks take huge losses on the value of their bond holdings, while Greek politicians have agreed on most of the austerity measures demanded by its creditors” Reuters reports. If I'm not wrong this solution has been already ruled out in the past.

Still a lot of confusion is surrounding the matter. Therefore the match is still open on the European table.

At 9.50 AM GMT, investors willingness to bet on Eu crisis solution will be tested with 5-10 years Italian Btp auctions, previous average yields were respectively: 5.84% and 5.82%.

Now, It's time to write your plan.

Have a nice day.

Originally posted at www.77sigmatrading.com