Intraday Market Thoughts

Euro Shrugs Greek Bank Recapitalization

by Patrik Urban
May 29, 2012 12:45

4 Greek banks recapitalized; German CPI still being collected; UK CBI sales soars by 27 pts; Swiss UBS consumption improves; Italian auction. Market turns to SP Case Schiller and CB consumer confidence. A new Intermarket Insight edition is due before the US open. See below for more detail.

USD trades slightly stronger across the board in the ongoing session and the major European equities are trading within -0.2% to +0.15%.

Four Greek banks were recapitalized yesterday as they received EUR 18 bln via bonds from the EFSF rescue fund which allows them to access the traditional ECB funding instead of the Emergency Liquidity Assistance (ELA) that has to be managed by the Greek central bank. Market sentiment improved throughout the Asian session but once London traders got to their desks they started to buy the greenback again.

German CPI for May is still being collected and the result is due later today. From states that have already submitted the results it seems that the monthly as well as the yearly inflation will ease further.

In the UK, CBI distributed sales soared 21% in May from April's -6% reaching the best levels in 13 months. June expected orders rose 18% from previous 6%. GBPUSD retraced momentarily but quickly lost its gains and trades near session lows around 1.5680.

The Swiss UBS consumption indicator rose again in April to 1.41 from previous 1.20. CHF has not responded at all to this report which was not surprising considering that it has been ignoring the ongoing chatter about the possibility of a capital controls on foreign deposits.

Italy was able to reach a full take up as it sold EUR 8.5 bln 6 month BOT but the average yield rose to 2.104% from 1.77% and bid to cover fell to 1.61 from 1.71.

The US session starts at 9:00 am ET with S&P Case Shiller index. The selling price of a single family home is expected to fall additional 2.7% in March after a 3.5% decline seen in February. May CB consumer confidence is due at 10:00 am ET and it is anticipated slightly higher at 69.8 from previous 69.2.

A new Intermarket Insight edition is due before the US open. All of our EURUSD shorts hit all targets, while the AUDUSD and gold shorts were stopped out. Oil, GBPUSD and USDCAD positioning remain in progress. Direct Access to these trades, click here: Non subscribers, can click here to join


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