The euro slipped below to $1.08 level

Good Morning,

- The euro slipped below to $1.08 level, slightly off Friday's high of $1.0850.

- Asian stock markets slipped on Monday and Chinese shares erased earlier sharp gains made after China's central bank boosted banks' lending power.

- The European economy is poised to contribute to the global economic recovery after years of languishing through stagnation and recession, Austria’s central bank Governor Nowotny signaled in an interview, as the region reaps the benefit of lower oil prices, a weaker exchange rate and stepped up investment. “There clearly is a feeling of improvement particularly for industrial countries, Europe has the potential to be a growth engine.”, Nowotny said.

- ECB's Noyer says Grexit would mean trauma for the Eurozone. Grexit would affect world economy. Greece faces major economic crisis if it leaves euro. Greece must quickly make full reform proposals, ball is in Greek govt's court. Greek banks at some point may not find collateral.

- IMF's European head: Global lenders' negotiations with Greece, which have been moving at a crawl recently, have gained some momentum but remained a long way from the finish line. Athens has been stuck in negotiations with its euro zone partners and the IMF over economic reforms required by its lenders to unlock remaining bailout funds. "There has been a little bit more impetus in the negotiations between the three institutions and the Greek government for several days," business daily Handelsblatt on Monday quoted Poul Thomsen as saying, referring to the EC, the ECB and the IMF. "That's a good development and gives us reason to hope," said Thomsen, the director of the IMF's European department and head of its program with Greece.

- Draghi said it is urgent that Greece strikes a deal with creditors, although its banks continue to meet the requirements for Emergency Liquidity Assistance. “ELA will continue to be given to the banks if they’re judged to be solvent and if they have adequate collateral which is the case now’’

- Goldman Sachs on USD: The USD in general seems to have struggled as of late as the USD Index (DXY) didn’t make it too far past 100, notes GS. "The high from March was 100.39. The market has failed to break ~100 the past two consecutive months. It’s clear this is an important pivot to focus on," GS adds. "It is worth noting that the long-term triangle target at 102.50 has not yet been satisfied. So while a correction is clearly underway, there is still reason to believe that the USD uptrend is largely intact," GS argues. Reflecting that in EUR/USD, GS thinks that although the pair has squeezed a little further than initially expected, there is still a case to be made for downside. "The next resistance to watch is 1.0839-1.0874. This includes 61.8% retrace from the Apr. 13th low. The final retracement level above there is 76.4% at 1.0914. While it’s possible for wave ii to retrace the entire length of wave i back to 1.1036 (high from Apr. 6th), ideally want to remain below 1.0914 to maintain conviction/ momentum," GS argues. The bank holds the view that the ultimate medium-term targets are still around 1.0286-1.0103.

- China's central bank cut the reserve requirement ratio for all banks by 100 basis points on Sunday, the second reduction in two months, as it steps up measures to boost bank lending and combat slowing growth. The country's largest banks will now be required to withhold 18.5 percent of cash reserves from lending. The People's Bank of China previously lowered the reserve requirement ratio for all commercial banks by 50 basis points on Feb. 4.

- Crude oil was higher, buoyed by the Chinese stimulus action, signs of lower U.S. production and ongoing Middle East turmoil. The leader of Yemen's Iranian-allied Houthi militia accused Saudi Arabia on Sunday of plotting to seize the country.

- Watch today: EU construction, US Chicago Fed.

Have a nice Week!