The EU summit comes into action today, and with the expectations to come up with a comprehensible plausible solution to shore up the EU crisis is at the bare minimum. Germany Markel’s comment regarding a Euro bonds solutions and I quote “over my dead body...” increased the fear that it will be another cheap talk without much substance.
Nevertheless, the market's remains focused even though he is skeptic on the anticipated summit. The main topics and solutions to be discussed is the joint issuance of debt, cross-border deposit insurance, regional bank integration and using proceeds from bailout funds to buy sovereign bonds.
Yesterday, Spain request to join the EFSE assistance has been accepted by the Euro-group after a teleconference between Eurozone finance ministers. According to the official statement, Spanish is expected to need 'a range of EUR 51-62 billion.'
'Ministers consider that providing assistance to Spain is warranted to safeguard financial stability in the euro area,' says the note. 'The financial assistance could be provided by the EFSF until the ESM becomes available, then it would be transferred to the ESM.
The Euro-group also welcomed the Cyprus request for financial assistance from euro area Member States and the IMF. 'The program will be negotiated by the Commission, in liaison with the ECB, with the Cypriot authorities and the IMF.'
Out of the US Yesterday, durable goods orders last month rose 1.1 percent after a revised 0.2-percent decrease for the prior month. That was well above economists' forecasts for a 0.5-percent increase. Core durable goods increased 0.4 percent, lower than expectations of a 0.9-percent reading but still much better than the drop of 0.6 percent in April.
Besides the EU summit today, the GDP numbers from the UK and later on the GDP numbers from the US will determined the market direction ahead of tomorrow enouncement at the end of the summit.
EUR/USD the Euro has climbed to as high as 1.2524 earlier during the Asian session, ahead of the two-day EU Summit starting today. The euro has been hovering around the 1.2500 mark since Monday, directionless and in a wait-and-see mode rather the EU leader can get to substantial agreements and acts that might prevent the deterioration from continue. Resistance and support area are marked on the chart;