- Germany denies it is considering allowing the EFSF and ESM in parallel
- Bloomberg: ECB considering loosening collateral rules, lengthening LTRO to 2-years and cutting rates at least 25 bp
- German govt spokesman: No deal for IMF loans at EU summit
- Belgian GDP falls 0.1% in Q#, first drop since early 2009
- GBP propped by M&A related demand: Traders
- Pre-Summit with Merkel, Sarkozy, Draghi and Van Rompuy ahead of EU dinner Thursday
- EBA bank recapitalization requirements to be published after European close Thursday
- German banks may be forced by government to accept government aid
- Nikkei: Japan changing GDP methodology; new calculation may add JPY 5-10 trln to size of economy
- DJ: IMF may need $120 in additional resources
- S&P puts European Union’s AAA rating on watch for a potential downgrade; 30 regional and local governments and many large banks like Deutsche Bank, Commerzbank and SocGen also placed on watch
- RBNZ leaves rates steady at 2.5%; may gently raise rates by mid-2012
- US consumer credit rises $7.7 bln
- G20 considering $600 bln IMF lending program for Europe, Nikkei reports;CNBC says IMF denies
- S&P 500 rises 0.2% to 1261; Milan falls 0.8%
- US 10-year note yield falls 0.5 bp to 2.03%; Italy climbs 15 bp to 6.07%
- WTI falls 0.72 to $100.54; gold +$14 to $1742
EUR/USD traded toward the bottom of recent ranges this morning as traders took effort by German officials to lower expectations ahead of the EU summit at face value. Lowering expectations has not been the norm ahead of the myriad summits we’ve seen in recent months. It is usually just the opposite. Perhaps politicians have learned something about markets at long last…
Unable to break through support in the 1.3340 area, EUR/USD edged higher into midday before rum ores of IMF participation began to underpin the euro. The rumors started small ($120 bln) and ended large ($600 bln) but we broke now new ground and remain not far from the familiar 1.3400 level as the day draws to a close. We end at 1.3414.
