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FOREX, COMMODITIES, STOCKS OUTLOOK 2/16: Two Minute Brief – Is EU Meeting "Judgment Day" For PIIGS, Markets?


Stocks: Prior Day: Asia down, Europe up, USA down Today: Asia up, Europe up, OVERSOLD BOUNCE FED BY GREEK BAILOUT HOPES, Many Daily Charts at Strong Support/Resistance as markets await EU Finance Ministers Meeting

- FX: bias to risk currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GBP in order of risk appetite appeal], as risk assets' oversold bounce (as the S&P 500 has pulled away from its lower Bollinger Band) stalls

- Main event: TUES: AUD Monetary Policy Meeting Minutes, GBP CPI, Core CPI y/y, BOE Inflation Letter, EUR German & EZ ZEW Economic Sentiment, USD TIC Long Term Purchases, WED: GBP Claimant Count, MPC Meeting Minutes, USD: Building Permits, FOMC Meeting Minutes THURS: BoJ Press Conference, CAD Core CPI, CPI m/m, US PPI m/m, Unemployment Claims, Philadelphia Fed Manufacturing Index, AUD RBA Gov Stevens Speaks

- Big Theme: Markets Rise on Hopes of Greek/PIIGS Bailout – Rally's continuation early this week suggests many believe resolution is coming from Today EU meeting, not just for Greece but for the entire PIIGS block, all of whom also will need help within the coming months. Plenty of evidence to the contrary, however, as neither EU nor PIIGS show political will for the financial pain of bailouts or austerity. Don't rule out an appeal to the rest of the world for aid in order to avoid risk of global crisis. That would allow a rescue package without political suicide for Northern EU leaders.


US: Friday Leadership from the tech sector helped stocks trim steep losses on further risk aversion stemming from a weaker-than-expected fourth quarter Euro-zone GDP reading and lack of concrete plans from the International Monetary Fund (NYSE:IMF) and the European Central Bank to support the euro. The stock market gapped down in the early going to trade with a loss of more than 1%. Along with the rest of the markets, likely to move with news on whether the EU Fin. Ministers meeting produces concrete plans to prevent PIIGS defaults. If so, markets could move sharply higher. If not, expect the opposite.

Asia: Up Asian stocks were modestly higher Tuesday in holiday-thinned trade as investors awaited a meeting of the Finance Ministers from the full 27 nation EU membership on Greece's debt crisis later today.

European Stock Outlook: Up Opening higher early Tuesday on hopes today's EU finance ministers' meeting will produce a solution to the PIIGS default threats. Don't rule out an appeal to the rest of the world to help in order to prevent a global crisis.

Commodities Outlook: Early Tuesday: Energy little changed, precious metals higher with modest rise in risk appetite on Greek bailout hopes from EU meeting today.

Crude Oil Daily Outlook: Up-Slightly higher Monday and into early Tuesday.

Gold Daily Outlook: Futures up about 0.01% Monday, early Tuesday prices held steady above $1,100 per ounce as investors remained risk averse on concern about Greece's fiscal crisis, but trading was subdued with many Asian players away for the Chinese new year.

FOREX Daily Outlook: Overall little change on a quiet Monday with many markets closed in Asia and the US. Bias to risk currencies on hopes for Greek bailout, future Australia rate increases. German Parliament said the EU can use an emergency clause within their treaty to allow aid to Greece, suggesting some help will ultimately be offered. Tuesday's meeting of all 27 EU finance ministers is expected to produce more concrete details for a rescue plan, which could reverse current trends in favor of risk currencies. EU officials continue to assert that default in the EZ is unthinkable.

US Dollar Daily Outlook: Down vs. all majors in early Tuesday trade, continuing the trend favoring risk currencies from light Monday trade.

Euro Daily Outlook: Early Tuesday: Overall, little changed from Monday. Up slightly vs. the USD, CHF, Down slightly vs. the JPY, GBP. Down Monday, vs. the AUD and riskier fx as risk assets continue to rebound modestly on Greek bailout hopes and great Aussie jobs data. Any sign of concrete steps to help Greece likely to boost the EUR, and other risk assets.

Yen Daily Outlook: Early Tuesday: Little changed from Monday: Down vs. the EUR, AUD, other risk FX, Up slightly vs. the USD and GBP. Monday: Despite stronger than expected GDP numbers and the lack of U.S. economic data, the Japanese Yen failed to stage a broad based rally. The Yen only managed to rise against the euro, British pound and Swiss Franc as the Australian and New Zealand dollars advanced against the Yen while the greenback remained unchanged.

British Pound Daily Outlook: Overall little changed from Monday. Early Tuesday: steady vs. the AUD, down vs. the Yen, up vs. the USD Monday: down vs. the AUD, Flat Wednesday into Thursday vs. the JPY, down vs. the EUR, USD, and riskier fx.

Australian Dollar Daily Outlook: Up vs. most fx Monday into Tuesday on modestly rising risk appetite ahead of Tuesday's EU finance ministers meeting which is expected to yield more concrete details about a rescue plan for Greece.

New Zealand Dollar Daily Outlook: Rising Monday and into Tuesday along with the other commodity dollars on improving risk appetite based on growing hopes for a bailout for Greece.

Canadian Dollar Daily Outlook: Rising Monday and into Tuesday along with the other commodity dollars on improving risk appetite based on growing hopes for a bailout for Greece.

Swiss Franc Daily Outlook: Little changed Monday into Tuesday as it sits just above the key SNB intervention point from last March of 1.4650

CONCLUSIONS & Big Picture: Markets are moving with news on the likelihood of a rescue for Greece and the rest of the PIIGS. EU Finance Ministers meeting today could produce big moves in either direction depending on whether markets see real commitment to a rescue or not.