Morning Meeting: Waiting for Moody's to junk.

Good Morning.

Let's start from where we left on Friday:

An independent audit on Friday showed Spanish banks will need a total of 59.3 billion euros in extra capital to beef up their strength, which was within expectations and welcomed by the European Commission, the European Central Bank and the International Monetary Fund.

The independent audit result was not the only news awaited: maketes on Friday waited for a review by credit rating agency Moody's, which currently rates Spain on one notch above junk with a negative outlook, the news did not come therefore heading into the weekend therefore adding pressure to investors nervousness.

Agitation was aggravated as Japan's largest manufacturers become more pessimistic and China's manufacturing shrank for second month.

Japan's Tankan index of sentiment among large manufacturers fell in the third quarter to minus 3, the fourth negative reading, the Bank of Japan said today. Economists forecasted a reading of minus 4.  In China, The official Purchasing Managers' Index, released by the National Bureau of Statistics along with the China Federation of Logistics and Purchasing, improved to 49.8 in September from 49.2 in August, but remained below the 50-point threshold. A reading below 50 indicates a deterioration.

The data follows the final reading of a privately-compiled survey by HSBC over the weekend, which put the September PMI for Chinese manufacturers at 47.9, up from 47.6 in August but also below the 50-point level.

With Mainland Chinese markets closed for the Golden Week Holiday, investors turned to Japan: the Nikkei stock average fell 1.12% to 8,770.79, a three week low.

European worries and Asian slowdown numbers sent the greenback higher versus the euro and the yen: the common currency traded 0.26 lower to 1.2825$, the Japanese yen fell 0.08% to 77.88$. The US dollar performance weighted on spot gold which traded 0.36% lower to 1,767.50$ an ounce.

Crude oil, the most affected commodity by economic slowdown fell 0.9% to $91.36 a barrel and Brent fell 0.7% to $111.66.

The Spanish dilemma and the Asian slowdown will weight on European shares on the opening, but speculation on another round of aid for Greece can sparkle a new optimism wave. According to wire service accounts citing two German magazines: “The Greeks will receive a list of reforms which must be approved by their parliament by a fixed date. The money will be released as soon as lawmakers have voted,” a Eurogroup source told the Wirtschaftswoche business weekly, Reuters reported. Another report in the Focus magazine cited European Parliament sounces as saying Greece would receive its next tranche worth 31 billion euros.

As we said in the past: it's a Nerve Game.

Have a great day.

Originally posted at www.77sigmatrading.com