Some traders are taking money off the table in case the ECB would do something after all, however in case it turns out to be a non-event it wouldn’t be much of surprise if this money would be flowing back into markets very quickly putting renewed pressure on stocks.

While generally chances are considered as slim that the ECB will lower rates and/or resume their periphery bond purchasing program after these topics haven’t even been discussed at the last meeting, it can’t necessarily be excluded completely altogether either as most recently inflation data has come down somewhat quicker than expected giving the ECB some leeway and the financial crisis itself having worsened substantially over the past month. Furthermore giving markets a slight lift are speculations that German and Spanish governments are nearing a compromise on how to provide the Spanish banking sector with funds via the EFSF if needed.

Later in the day focus is already expected to shift to tomorrow’s crucial Spanish bond auctions, which are expected not only to be a tough test but should also shed some light in regard to just how risk averse investors have become over the past few weeks and. Furthermore, tomorrow Fed Chief Bernanke is due to testify in front of lawmakers about the economic outlook of the US.

Markus Huber - Head of German HNW Trading - ETX Capital
www.etxcapital.com