Italian Auctions in Focus, Greece Nears PSI Deal

China returned from a week of holidays with no cut in reserve ratios. JPY and USD are the early leaders with AUD trailing badly. Italian auctions and developments in Greece are highlights of the upcoming session. Greece is one step away from PSI deal. More info on those Premium trades below.

The euro has slumped in early trading, sliding to 1.3180 from 1.3220 at the close on Friday. Many economists had predicted China would lower reserve ratios before the end of holidays. Others note that a $55.7B central bank fund injection had a similar effect to a reserve ratio cut.

Weekend news focused on Greece where PSI negotiations appear to be winding toward a solution. The WSJ reported that bondholders have compromised again and will accept a lower interest rate. An interesting development in the ongoing Greek crisis suggests German leaders are asking that Athens cedes control of its budget, a move that will give ammunition to euroskeptics.

Economic data has been light at the outset of trading. The New Zealand performance of services index fell to the lowest since 2009, hurting NZD. The RBNZ also reported at Governor Bollard will step down in September. The UK January Hometrack housing survey was flat after a 0.2% last month.

At 1000 GMT, Italian is holding 4 bonds sales with maturities ranging from 5-10 years and a target of 8 billion euros. Given the recent success at Italian auctions these events are becoming less-anticipated and are less likely to jar the market.

Regional German CPI figures will also be trickling out throughout the session culminating with the national numbers early in the German afternoon.

Thursday night's Premium euro longs were not filled (missed by 3 pips), bu keep an eye on the USDCAD longs. The rest of those Premium trades are accompanied by 4 charts on Gold, EUR, US crude and Eurozone spreads. http://ashraflaidi.com/products/sub01/access/?a=590 Non subscribers click here: http://ashraflaidi.com/products/sub01/