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We have heard conflicting information about Greece over the last 24 hours: first we heard that Greece was making plans to leave the Eurozone from former Prime Minister Papademos, which was denied. Then this morning reports from a German newspaper suggested that the ECB had set up a task force (tucked away in a bunker) working on the potential fallout from a Greek exit. It's likely that we will get these conflicting headlines between now and the end of the EU summit, which starts this evening at 1800 BST. The markets' seemed to like the idea of an Avengers - style ECB working to combat the negative effects if Athens goes to the wall, and the euro bounced from its lowest level since 2010 earlier. But the real test will be the outcome of today's summit. So what should we expect and, ...

Equities and risky FX bounce after G8 commitment to Greece and China hints of easing Economic Data (JP) JAPAN MAR ALL INDUSTRY ACTIVITY INDEX M/M: -0.3% V -0.1%E (3rd consecutive decline) (NZ) NEW ZEALAND APR NET MIGRATION: -850 V 230 PRIOR (NZ) NEW ZEALAND APR CREDIT CARD SPENDING M/M: 0.2% V 0.4% PRIOR; Y/Y: 3.7% V 5.3% PRIOR (TH) THAILAND Q1 GDP Q/Q: 11.0% V 10.0%E; Y/Y: +0.3% V -0.5%E (UK) UK MAY RIGHTMOVE HOUSE PRICE M/M: 0.0% V 2.9% PRIOR (4-month low); Y/Y: 2.0% V 3.4% PRIOR Markets Snapshot (as of 04:30GMT) Nikkei225 +0.7% S&P/ASX +0.3% Kospi +0.9% Shanghai Composite +0.2% Hang Seng -0.1% Jun S&P Futures +0.5% at 1,297 June gold +0.4% at $1,599/oz June Crude +0.5% at $91.90 Overview/Top Headlines Asian equity markets, commodities, and risk-on FX opened the new week ...

U.S. Review To QE3 or Not To QE3: That is the Question - Some market participants are beginning to speculate about another round of quantitative easing. Although recent growth indicators have not been particularly stellar, the economy is still growing. Moreover, core CPI inflation in the neighborhood of 2 percent means that the threshold for more QE is relatively high. - Overall, indicators were positive during the week. Housing starts increased by 2.6 percent in April, the Empire Manufacturing index improved to 17.09 in May from a 6.56 print in April and retail sales printed a 0.1 percent increase in April, in line with expectations. To QE3 or Not To QE3: That is the Question QE3 seems to have more lives that a cat; it comes back into the forefront of the U.S. economy discussion ...

Fundamental Analysis EUR "We expect euro-region inflation to normalize in 2013" - Michael Schubert, an economist at Commerzbank AG Inflation in the seventeen nation bloc eased to 2.6 per cent in March from 2.7 per cent the previous month, said the European Union’s statistics office in Luxembourg on Wednesday. USD "Uncertainty about Greece and the effects a potential exit out of the euro would have on Europe, the global economy and the financial system in general is driving investors out of stocks into safe havens" - Markus Huber, head of German sales trading at ETX Capital The Standard & Poor's 500 lost 0.44%, or 5.86 points, to 1,324.80. The Dow Jones Industrial Average declined by 0.26%, or 33.45 points, to 12,598.55. GBP Unemployment figures are a "welcome step in the right ...

Weekly Focus: The Greek Tragedy Continues ■Government formation in Greece will continue to attract attention. Also keep an eye on the Eurogroup and Ecofin meetings next week. ■Global PMI releases will be important given the current mixed signals on the state of global growth. This includes the first-ever release of the US Markit flash PMI. ■US retail sales are likely to post anaemic growth as lower gasoline prices and sluggish same-store sales are dragging down sales growth. ■GDP data is likely to show global growth accelerating in Q1. We expect strong numbers for Japan and Norway, while euro area growth is likely to remain negative. ■We expect the People's Bank of China to deliver a 50bp cut in the reserve requirement within the coming two weeks. ■In ...

Fundamental News Today’s highlights: · ECB President Draghi Speaks (EUR, 13:30 GMT) · FOMC Member Fisher Speaks (U.S., 16:15 GMT) · Housing Starts (CAD, 13:15 GMT) Consumer borrowing in the U.S. surged in March by the most in more than a decade on growing demand for educational financing and autos. Credit rose by $21.4 billion, the biggest gain since November 2001, to $2.54 trillion, Federal Reserve figures showed today in Washington. The advance was paced by a $16.2 billion jump in non-revolving debt, including student and car loans. Australia’s trade deficit was at A$1.587 billion in March, the Australian Bureau of Statistics said on Tuesday. That missed forecasts for a shortfall of A$1.4 billion after showing a deficit of A$754 million in February. Exports ...

The Weekly Bottom Line HIGHLIGHTS OF THE WEEK United States - U.S. job creation may have weakened in the last few months, but the grounds for sustaining stronger employment growth are more fertile now than have been since the economic recovery began. Europe's labor market, by contrast, is likely to deteriorate further before it gets better. - Europe's (nonfinancial) corporate sector is highly leveraged. As balance sheet adjustments are made, Europe risks further decreases in investment, higher layoffs, and lower economic growth. These effects are compounded by deleveraging in the public sector. - U.S. corporations, by contrast, are more profitable and liquid than they have ever been. At some point some of these funds will be unleashed towards new investment, creating a positive ...

(Reuters) - Quarterly reports from some of Europe's top banks showed the scars of the euro zone crisis on Thursday, with big losses on Spanish property, and fragile markets casting a shadow over the rest of the year despite an early investment banking rebound. Spanish bank Santander said first quarter net profit dropped 24 percent after it took a 3.1 billion euro ($4.1 billion) provision to cover rising loan defaults, as the effects of Spain's property market crash were compounded by economic recession and joblessness afflicting nearly one in four workers. Although results from Barclays and Deutsche Bank showed investment banking income bounced back strongly after a torrid end to last year, the sickly euro zone economy continues to dog the industry. Barclays beat analysts' forecasts ...

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD Surprisingly-strongUS earnings reports released after the NY close generated an upbeat tone in Asia, allowing the Australian dollar to claw back all losses it has suffered since Tuesday’s soft CPI reading. Asian equities also got a boost, and USDJPY is still looking firm ahead of tonight’s Fed policy announcements. There are three FOMC-related events to watch out for. The policy statement will be published first, but our US economists doubt the Fed will alter its view that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. Ninety minutes later the quarterly forecasts may show some modest upward revisions to inflation and growth projections, and some Fed officials may ...