Euro Rebounds but Stays in the Summer Doldrums

The ECB denied it was considering a yield-cap on periphery bonds but the euro was able to hang on to a small gain. On the day, the Australian dollar was the best performer while USD lagged. The RBA minutes are the chief event risk in Asia. Latest Premium Insights are due in 60 mins from now.

The euro fell below 1.23 after an ECB spokesman denied the weekend Der Spiegel report that said the ECB was considering a cap on periphery yields. Optimism remained, however, with Spanish 10-year yields falling 15 basis points to a six-week low of 6.28%. The euro rebounded close to 1.2350 but the close of European trading and then moved sideways for the remainder of US trading.

Greece was in focus after the foreign minister said leaders will propose 11.7B euros in cost-savings to the Troika in early September. German re-iterated its opposition to softening the Greek bailout program.

There was no US economic data so the market had very little direction. The S&P 500 closed unchanged at 1418.

Gold climbed back above $1620. Its the sixth attempt to break out of the top side of the range in place since May. A large move is unlikely until the Fed offers some guidance on QE3 at the end of the month.

The top item on the Asia-Pacific schedule is the 0130 GMT release of the August RBA minutes. Some market watchers have begun to price in rate hikes for next year. They will be looking for a more hawkish stance and confidence about growth among Asian neighbours.

In Japan, at 0430 GMT, the all-industry index is expected to increase 0.2% after a 0.3% fall in May. At 0530 GMT, department store sales will be released.

- AB