# In a relatively quiet session equities meandered higher as the Olympics and the start of the European holiday season kept interest light. The EuroStoxx600 closed up 0.46% and the S&P500 up a modest 0.23% which was enough to forge new 3 month highs for the U.S. index.
# Borrowing rates for the problematic Spanish and Italian economies once again fell keeping the better tone of recent days intact. The benchmark 10 year bond yields for the two countries drifted off by about 10 basis points.
# Benefitting from the ‘risk on’ environment the NZD/USD reached 4 month highs of 0.8225. At the other end of the spectrum the GBP/USD fell slightly as we head into Wednesday’s Bank of England Inflation Report. The BoE’s growth and inflation forecasts are expected to be slashed, paving the way for a possible rate cut in September. As a result of the divergent paths, NZD/GBP rose to 5 ½ month highs of 0.5270.
# At odds with the current feel good sentiment was the JPY usually a beneficiary in troubled times. The JPY strengthened despite the positive equity markets and continues to frustrate a market which, on the whole, believes the JPY should be significantly weaker. The BOJ meets this week and after a string of ‘no change’ decisions the market now expects the central bank to again remain on hold.
# IMF PUSHING EURO ZONE TO HELP LIGHTEN GREECE’S BAILOUT-LOAN BURDEN -OFFICIALS. The Wall Street Journal is reporting that IMF member countries are expressing doubts that the bailout terms agreed to in February may no longer be operable given the sharp deterioration in the Greek economy since then. This is definitely a story to watch going forward.
# NZ Labour Cost Index
# RBA Cash Rate Announcement
# UK Manufacturing Production
# U.S. FED Chairman Bernanke speaks again
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