Risky assets open the week on a light bid
What happened overnight
* Spiegel reports ECB is considering imposing cap on Spanish yields
* WSJ reports Spain seeks ECB commitment to unlimited bond purchases
* China new home prices rise in July following interest rate cuts
* Flash European PMIs in focus this week
Risk was moderately bid in a quiet overnight session, with tight price action and light on data and news. EURUSD has been trading in a tight range between 1.2315 and 1.2369, supported by reports by Germany’s Der Spiegel that the ECB is seeking to impose a cap on yields for Spain and Italy. The story does not provide details, but notes that the proposal is set to be discussed at the
September European leaders summit. If confirmed, this would represent a significant positive development for peripheral funding conditions. Risk currencies were slightly stronger overnight, in line with price action in risky assets, with AUD, MXN, CAD, and ZAR reporting small gains against both the USD and the EUR. Asian currencies remained in tight ranges while the PBoC set the USDCNY rate at 6.3478, 29 pips higher than last Friday’s fix.
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