Daily Market Review 21 of August
The European and US markets closed relatively flat on Monday, as hopes for fresh easing measures by the European Central Bank subsided and a head of a series of meetings between euro zone leaders throughout the week.

The ECB dismissed reports Monday that it may set a cap on peripheral euro zone bond yields, saying it was 'absolutely misleading' to report on decisions that have not yet been taken.

At the close of European trade, the EURO STOXX 50 fell 0.21%, France’s CAC 40 gave back 0.22%, while Germany’s DAX 30 eased lower by 0.10%.

The Dow Jones industrial average close 0.03 percent down, while the S&P 500 and the Nasdaq Composite close on 0.0% and 0.1% down respectively.

On a long term view, the S&P 500 capped its longest stretch of weekly gains since January 2011 as economic reports beat forecasts and Germany backed the ECB’s bond-buying plan. Trading volume and volatility have dropped this month as vacationing traders await policy clues from the Federal Reserve’s summit at the end of the month and an ECB meeting in September.

Early today, Spain’s Treasury sold EUR3.53 billion worth of 12-month government bonds, at an average yield of 3.07%, compared to 3.91% at a previous auction. This auction came after a long period of time and it did manage to close relatively strong.

For the rest of the day, the markets are expected to remain subdued, with no significant economic data releases on the calendar, while volumes were light with many market participants on summer holidays.

EUR/USD The euro rose to a 2-week high against the greenback after the German member of the European Central Bank’s Executive Board, indicated that he would support the bond purchasing program proposed by ECB head Mario Draghi, in spite of warnings from Germany’s central bank. This remark by the German member came one day before a series of highly anticipated euro zone meetings throughout the week, amid growing hopes for fresh action to tackle the region’s debt crisis.