German Opposition to Ease on Bond, Premium Trades

Chancellor Merkel reaffirms her opposition to Eurozone bond. Gold and silver continue to rise. Market turns to Mortgage delinquencies.

USD is mixed since London open. It is stronger against the GBP, CHF and JPY and weaker against the other majors. After a brief consolidation, risk currencies continue to press higher, currently nearly 100 points off their respective lows.

The sentiment towards the common currency could worsen as German Chancellor Merkel said she would continue to resist the idea of Eurozone bond as a way to solve Eurozones debt crisis. Markets were hoping to hear that such an option is still on the table but it seems that German opposition to the common bond continues to grow. Merkel also said that she will not let financial markets dictate policy and that euro bond are precisely the wrong answer to current debt problem.

Gold continues its relentless ascent and trades 40+ USD higher above Fridays close reaching the high of 1895. Previous reports that gold will struggle to hold above 1800 were proven false as there are still many buyers. The price action on silver is similar to gold as it trades near 44 from Fridays close at 42.99.

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The only fundamental data release for todays New York session is MBAs Mortgage delinquencies for Q2 due at 10:00 am ET. In Q1, delinquencies rose slightly to 8.32% reversing a downward trend that started in May 2010. This lagging indicator provides valuable data about the general health of the housing market as delinquencies are correlated with home inventories.