– Risk currencies and equity rallied
– Japan machine orders better than expected
– SGDNEER bandwidth may be narrower than we previously estimated
What to watch for today
EUR: Court ruling. The German constitutional court ruling today will be the main focus. The court will start reading the decision at 9:00 BST and will post it on-line once it has been entirely reviewed. Risks are fairly asymmetrical heading into the event: if the ESM laws are upheld, the event will pass with only modest additional benefit for the EUR and risk sentiment. However, a ruling against the legislation would likely represent a major risk aversion and systemic stress event, with impact visible on charts for years to come. We view a ruling against the treaty as very unlikely, although we wouldn’t be surprised to see more strings attached relating to parliamentary approval of future aid decisions.
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