EUR/USD unchanged above 1.2500

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EUR/USD has been flat all Asian session long once again, last at 1.2509 from a previous weekly close Friday at 1.2512, and session highs at 1.2523 with session lows at 1.2499. Local share markets show mixed results, with Nikkei higher by +0.54% while Shanghai loses -0.84%, and all the rest in the middle. Gold prints fresh 4-month high today at $1677, last slightly below the $1675 mark, while oil is also on the rise this Monday in Asia-Pacific with Brent oil right below the $116 figure, up +1.24% from previous weekly close Friday.

Spain postpones financial reform; Merkel wants Greece to remain part of the EU

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Troika representatives held a meeting with the Spanish government on Friday in Madrid, during which they decided to postpone by one week the approval of the financial reform which will permit the EU to grant Spain a 100 billion euro aid for distressed banks.

Spanish Deputy PM Soraya Sáenz de Santamaría told reporters that “the European Commission asked us for one more week to analyze it jointly” and that the reform will be approved next Friday.” She stressed however that there was no disagreement on the subject, just a willingness to work on it together.

Will we see yield/increase targeting by the ECB?

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This week, the rumor that the ECB is planning on yield or spread targeting has been mooted and denied so many times I’ve lost count. We will presumably find out more about this when we hear from Mario Draghi after the ECB governing council meeting on September 6th. In the meantime, falling peripheral short- and long-term bond yields would suggest that investors are betting the rumors are true. With so much upside already priced into the bond markets regarding ECB intervention, the room for disappointment is substantial. Will the ECB engage in a yield or spread targeting exercise? It might, but I doubt we’ll be told about it.

Mario Draghi was one of the first to indicate that the ECB might engage in yield or spread targeting on August 2nd at the ECB governing council press conference. He highlighted that the ECB thinks that some countries (ahem, Spain and Italy) are having to pay elevated borrowing costs because of concerns about convertibility, and that this was hindering monetary policy transmission. As he put it: “Exceptionally high risk premia are observed in government bond prices in several countries and financial fragmentation hinders the effective working of monetary policy. Risk premia that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner.”

EUR/USD in a 15 pip range above 1.2550

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As it's been usual for some recent Asia-Pacific sessions, EUR/USD is currently inside a very narrow range 1.2568/53 since session started, last at 1.2561, off yesterday's and fresh 6-week highs at 1.2588. Local share markets trade all in the red losing on average more than -1%, while gold retreats at $1665 from recent 4-month high yesterday at $1673, and US SP500 futures stay flat barely above the 1400 points mark.

Again London session ahead will show no EUR macro data related risk events on the agenda, with focus on Greek-EZ leaders meetings going on, today with Greek PM Samaras visiting German PM Merkel, and also on Spain possibly asking for the bailout as soon as mid Sept according to sources, with its risk premium back above the 500bps for German 10y yields. As usually for Fridays, no EZ sovereign debt auctions will take place today.

Forex: EUR/USD complete under 1.2550

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Another slow session in Asia-Pacific today for EUR/USD last at 1.2549 near fresh 6-week highs after 4 straight days rising, and stalled below the 38.2% retrace of the down leg 1.3390/1.2037 at 1.2554. The pair is about 25 pips above its initial price in the session, lows at the same time, extending the rally prompted yesterday during NY late session after Fed minutes came in signaling a very proll QE3 in some form on the way, adding for a +1.63% gain for the pair on the week.

USD/GBP exceed earlier, near 1.5900

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The GBP/USD extends its advance to levels not seen since mid May, reaching so far 1.5871 and holding near the level as dollar is being punished across the board. Market players are pricing in more QE3 as soon as September, with eyes now on US’ Jackson Hole meeting. Gold leads the way having added over $15 in the last minutes and reaching also a 3-month high at $1652/oz.

The GPB/USD holds near mentioned high, aiming to test the 1.5900 figure immediate resistance, ahead of May 17th daily high at 1.5931. Supports for the short term are located at 1.5810, 1.5770 and the 1.5730/40 price zone.

Source : fxstreet.com
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FOREX : EUR/USD lose to beaten 1.2485

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The euro easily done to liveliness from a daily short of 1.2430 during the New York session later softer-than-expected US housing data. However, EUR/USD stalled just short of the 7-week high of 1.2488 reached on Tuesday, and pulled back.

[US] Home Sales rise less than expected by 2.3% in July

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Existing Home Sale data released in earlier before schedule. With boost in the ratio( $4.37M to $4.47M ) by 2.3% upward. However, market consent was pointing to a unconditional finish, to $4.52 (+3.8%). Data had dropped by -5.4% in June.

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