MORNING BRIEFING: Germany sets tough terms on Greek aid; 2-day FOMC meeting starts today

[RTFX-Trading]

MORNING BRIEFING: Germany sets tough terms on Greek aid; 2-day FOMC meeting starts today

[B][I][U]What’s new:[/U][/I][/B]
Forex: Euro slides as short-covering stalls.
China: Government economist says Q2 trends pointing towards Yuan move.
Euro zone: Greek aid a matter for all Eurozone states, Rehn.
Euro zone: Portugal trying to avoid Greece situation says Foreign Minister.
Euro zone: Greek bonds plummet on Monday as Germany sets tough terms.
United States: 2-day FOMC meeting starts today.
United States: US Consumer confidence today, exp 53.5 vs 52.5.

[B][I][U]Today:[/U][/I][/B]
[IMG]http://www.rtfx.com/images/news/CAL270410.gif[/IMG]

[B][I][U]Overnight Rates and Indices: [/U][/I][/B]
EURUSD: 1.3415 – 1.3357.
USDCHF: 1.0748 – 1.0700.
GBPUSD: 1.5485 – 1.5389.
EURJPY: 125.98 – 125.21.
USDJPY: 94.05 – 93.68.
DowJones: 10’786 +0.41%
NASDAQ: 2’523 -0.28%
S&P 500: 1’1212 -0.43%
Nikkei: 11’213 +0.42%.
Shanghai: 2’908 -2.09%,
Gold: $1’153
Crude Oil: $83.65

[B][I][U]Comments: [/U][/I][/B]

German Chancellor Merkel said Germany stood ready to commit funds for Greece within days if it agreed to painful new austerity measures. Greece's borrowing costs rose to a 12-year peak on investors' fears that assistance would come too late to avert the Euro zone's first sovereign debt default. Concern over sovereign credit risk also dragged down the Euro and Greek bank stocks and pushed the cost of insuring Portugal's debt to new highs, underlining concerns that it could be the next Euro zone state to suffer a debt crisis.

The Euro fell to 1.3357 after not being able to hold above 1.3400 following some short-covering which drove the single currency off a one-year low against the greenback. While against the Yen, the Euro fell to 125.21 after failing to break 126. Meanwhile Yen crosses came off lows on Tuesday, as the Australian Dollar and Canadian Dollar both retreated from 19-month highs. The Aussie is down 0.52% to 86.63 versus the Yen, while the Canadian Dollar is down 0.33% to 93.54 so far.

Today the Fed starts their 2-day FOMC meeting. The market is expecting the Fed to sound upbeat on the US economy, setting the stage for a rate increase later this year. In the last couple of weeks there has been market talks that the Fed might be starting to increase their exit measures from the extraordinary easing they took in the last year and a half since the breaking of the global financial crisis. Some Fed members might propose that some of the Fed’s assets should be sold. We are extremely curios to see whether the ‘’extended period’’ phrase will be modified or removed.

Good Day.

Emman Xuereb
Trading Desk
RTFX Ltd
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