An inconclusive euro area leaders summit
What happened overnight
– EU leaders summit buys time on ESM bank recapitalization
– Buy 3m GBPCHF call spreads and sell NZD vs. AUD & GBP basket
Markets were relatively quiet overnight with a risk off bias, in absence of new significant pieces of news or data. In Europe, the spotlight was on the euro area leaders summit. No major announcement took place at the summit and the extension of a new or of a modified rescue plan for Spain and Greece respectively was not addressed. The summit focused mostly on the creation of the infrastructure behind the bank supervisor plan, and on the implementation of the ESM’s ability to directly recapitalize banks, but without any clear policy decisions. EURUSD traded soft on these news, moving below yesterday’s lows and nearing the 1.30 level. AUDUSD was basically unchanged around 1.0363, saving traded in a 40 pip range. European peripheral sovereign markets were mostly flat on the day, whereas equities were trading on a softer footing across the board.
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Credit Suisse