MORNING BRIEFING: Eurozone governments agreed to aid Greece, says source.

[RTFX-Trading]

MORNING BRIEFING: Eurozone governments agreed to aid Greece, says source.

What’s new:
Euro-zone: European governments agree to help Greece, says source.
Euro-zone: Almunia urges European leaders to back Athens at Thursday summit.
Germany: Government spokesman denies decision taken on Greece bailout.
ECB: Nowotny says Greece must solve their problems themselves.
United States: Bernanke’s testimony scheduled at 1600 CET.

Today:


Overnight Rates and Indices:
EURUSD: 1.3807 – 1.3734.
USDCHF: 1.0679 – 1.0635.
GBPUSD: 1.5725 – 1.5650.
EURJPY: 124.28 – 123.01.
USDJPY: 90.02 – 89.53.
DowJones: 10’058.64 +1.52%
NASDAQ: 2’150.87 +1.17%
S&P 500: 1’070.52 +1.30%
Nikkei: 9’963.99 +0.31%.
Shanghai: 2’982.50 +1.14%,
Gold: $1’078.90
Crude Oil: $73.59
 
Comments:

European governments have agreed in principle to help debt-stricken Greece, a senior German coalition source said on Tuesday. This would be the first rescue of a euro zone member in the currency's 11-year history. Various options were being considered and a decision has yet to be taken but the most likely possibility was to offer "bilateral help", the source said.

The Financial Times Deutschland also reported that Germany was preparing an aid package for Greece.
These comments were the strongest signal so far that European Union economic heavyweight Germany may be ready to step in to stave off a crisis of confidence in the 16-nation currency bloc that has roiled markets around the globe.

The disclosure comes just two days before a European Union summit expected to discuss the Greek debt crisis. Outgoing EU Monetary Affairs Commissioner Joaquin Almunia fuelled speculation of a rescue by urging European leaders at their meeting on Thursday to help Athens in exchange for drastic fiscal reforms. Almunia said, "I would like the leaders of Europe to say to the Greek authorities that in exchange for the efforts you are making, you are going to get support from us," Almunia told the European Parliament. He added, "You don't get support for free. That would simply lay the foundations for further imbalances and crisis. We have got instruments to provide that in exchange for clear commitments that they will meet their responsibilities."

The Euro hit a daily high at 1.3839 against the US Dollar following the comments from the German source, but fell back slightly after the bailout rumors were denied. Against the Yen, the Euro is now trading at 123.50 after reaching 124.28 earlier during Asian trading. The rebound of the single currency is being attributed to investors unwinding short positions in the Euro. However, the rebound has been timid so far, which suggest that the market is not fully convinced about the possible bailout of Greece.

The market today is keenly awaiting FED Chairman Bernanke who is expected to outline the FED’s tightening strategy. The testimony is scheduled to be released at 1600 CET.

Have a nice day.

Emman Xuereb

Trading Desk
RTFX Ltd
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