• EFSF to be able to intervene in secondary bond market, bolster Greek collateral in case of technical default
  • Net present value of Greek debt burden lowered by 20-25%
  • Trichet: We maintained the currency’s value
  • Banks to swap bonds with short maturities for 30-year paper
  • Total package from EU EUR 109 bln; Private sector EUR 50 bln over life of deal
  • EFSF loan rates cut to 3.5%; maturities lengthened to at least 15 years for Greece, Portugal and Ireland
  • Spreads between German, PIGS bonds narrow sharply; CDS fall, euro rises
  • US debt deal close, NYT reports; White House, Congress deny
  • Equities rally strongly; S&P rises 1.4%
  • Gold falls as jitters recede in Europe; closes at $1590

EUR/USD ends the day on its highs, around 1.4410 as EU leaders seem to have at least made a dent in the Greek debt burden. We have yet to hear from the ratings agencies to see if they make good on their threats to declare Greece in selective default based on the involvement of the private sector agreeing to swap maturing bonds for bonds with a 30-year maturity. The EFSF will provide a facility to allow the ECB to accept Greek debt even if deemed to be in default, which gave the market a great deal of comfort.

Hopes for a US debt deal where raised today with reports doing the rounds that Obama and the House Reps are close to a deal. That helped the risk-on atmosphere that prevailed for much of the session as details of the EU deal for Greece began leaking first thing in the NY session.

AUD/USD blew through 1.0800 and triggered 1.0810 stops with hedge funds absorbing central bank selling. Momentum players pushed the pair as high as 1.0855 after breaking the stubborn area of resistance near 1.0800 this morning.

USD/JPY closes at its lowest levels since the post-earthquake plunge to 76.205 with today’s 78.35 close. Higher US yields were no help to the greenback nor was the risk-on atmosphere.