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US OPENING NEWS INCLUDING: EU said that Greece reform program is on track

Last updated: 13:08 06 Jun 2013 BST, First published: 12:08 06 Jun 2013 BST

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BoE decision at 1200BST (0600CDT) and ECB at 1245BST (0645CDT) and press conference at 1330BST (0730CDT)

The Nikkei 225 in Japan fell another 0.85% and has now lost almost 20% from its highs, signifying a bear market.

Greece may need to take additional measures if it has funding gap in 2015/16, according to the IMF Greece Chief. However, the EU said that Greece reform program is on track.

Market Re-Cap

As to be expected, given that today is the so-called central bank Thursday and sees decisions both from the ECB and the BoE meant that although stocks in Europe traded higher, the price action was somewhat subdued. More interestingly is that financials underperformed on the sector break-down, largely due to an outside chance of the ECB imposing negative rates which would risk undermining the profitability of banks in the joint currency bloc, at least in the very near term. As such, it is more likely than not that the central bank will announce that it is to loosen its collateral policy and potentially focus on ABS haircuts. 

Looking elsewhere, the Nikkei 225 in Japan fell another 0.85% and has now lost almost 20% from its highs, signifying a bear market. However unlike on previous occasions and in-spite of settling below the 50DMA line yesterday, USD/JPY traded steady overnight, albeit still below the key 100.00 level. Going forward, apart from awaiting the outcome of the latest monetary policy decisions in the UK by the MPC and the ECB in the Eurozone, market participants will also get to digest the release of the latest weekly jobs report and also the refunding announcement from the US Treasury. 

Asian Headlines

The Bank of Japan are said to be divided on measures to quell bond volatility. According to people familiar with the talks, the BoJ board are said to be split on allowing two-year funding operations, and the expansion of Japanese real estate investment trust buys is opposed within the bank.

EU & UK Headlines

Greece may need to take additional measures if it has funding gap in 2015/16, according to the IMF Greece Chief. IMF said debt sustainability concerns hang over Greek program, EU may need to weigh more front loaded Greek relief and risks on the Greek debt sustainability remain on the downside. The IMF sees Greek 2013 GDP shrinking 4.2% and expanding 0.6% in 2014.

German Factory Orders SA (Apr) M/M -2.3% vs. Exp. -1.0% (Prev. 2.2%, Rev. 2.3%)

German Factory Orders NSA (Apr) Y/Y -0.4% vs. Exp. 0.9% (Prev. -0.4%, Rev. -0.3%)

Spanish bond auction results, sells EUR 4.02bln vs. Exp. EUR 3.00-4.00bln

- Sells EUR 1.53bln in 2.75% 2015, b/c 3.0 (Prev. 4.01) and avg. yield 1.903% (Prev. 2.275%)

- Sells EUR 1.01bln in 3.3% 2016, b/c 2.4 (Prev. 2.24) and avg. yield 2.706% (Prev. 2.442%)

- Sells EUR 1.49bln in 4.4% 2023, 2.5 and avg. yield 4.517%

French bond auction results, sells EUR 7.99bln vs. Exp. EUR 7.00-8.00bln 

- Sells EUR 1.825bln in 3.50% 2020, b/c 2.22 (Prev. 2.86) and avg. yield 1.30% (Prev. 1.26%)

- Sells EUR 3.84bln in 1.75% 2023, b/c 1.61 (Prev. 2.33) and avg. yield 2.04% (Prev. 1.81%)

- Sells EUR 2.323bln in 2.75% 2027, b/c 2.56 (Prev. 2.52) and avg. yield 2.58% (Prev. 2.71%)

Note: Bund, Bobl, Schatz June-futures expiry 1615BST (1015CST)

US Headlines

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Equities

As to be expected, given that today is the so-called central bank Thursday and sees decisions both from the ECB and the BoE meant that although stocks in Europe traded higher, the price action was somewhat subdued. More interestingly is that financials underperformed on the sector break-down, largely due to an outside chance of the ECB imposing negative rates which would risk undermining the profitability of banks in the joint currency bloc, at least in the very near term. 

The Federal Reserve has granted foreign banks lee-way in Dodd-Frank requirements to separate swaps trading from their US branches.

Nomura sold 50% of SMBC stake in Barclays (84.5mln shares at GBP 3.085) Co. shares traded lower by around 2.4%.

**Note: Please refer to the European Morning Opening News on the website

FX

Given that both the ECB and the BoE are expected to keep rates unchanged also helped support EUR/USD and GBP/USD, both seen higher by around 30pips. 

Overnight, AUD weakened with AUD/USD dipping below the 0.9500 level for the first time since October 2011. AUD saw volatile trade following the release of weaker than expected Australian Trade Balance for April of AUD 28mln vs. AUD 180mln.

Commodities

Heading into the North American open, WTI crude futures approach yesterday's highs of USD 94.48, as the USD-index is seen down 0.25%. Market participants look ahead to key risk events of the day, with rate decisions from both the ECB and BoE scheduled, as well as initial US jobless data ahead of tomorrow's non-farm payrolls. In terms of energy-specific releases, EIA weekly natural gas storage change data is due at 1530BST/0930CDT.

China is to cut gasoline prices by CNY 95.00 per tonne and diesel prices from CNY 90.00 per tonne from tomorrow. 

Both parties in the US Congress are pressing for tougher sanctions on Iran, betting that resurgence in US oil output and signs of ample global supply will prevent prices from rising. However, such an extreme goal would risk antagonizing China and India, the biggest remaining buyers of Iranian crude, and could push oil prices higher in a hit to the global economy.

US gold and silver bullion coin sales on pace to record in 2013.

The White House said it condemns in "strongest possible terms" Assad's assault on Qusair and called on Hezbollah and Iran to immediately withdraw their fighters from Syria.

Tropical storm Andrea was swirling over the east-central Gulf, about 210miles southwest of Tampa, Florida, and packing maximum sustained winds of 60mph, according to the NHC.

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