Also risk positive is the bond markets’ reaction to the German Constitutional Court ruling in favor of the ESM that triggered a decline of the Spanish and Italian yields on the secondary market. The Spanish and the Italian 10-years are down to 5.65% and 5.05%. The Spain/Germany and Italy/Germany 10-year spreads narrowed by 250bp and 190bp during the summer.
Meanwhile in the US, wholesale inventories rose by 0.7% in July, above +0.2% consensus, and following a -0.2% decline in June. EUR/USD has eroded the 200 day ma at 1.2832, and the 2012 resistance line at 1.2840, this suggests further near term gains are likely towards initially 1.2974/1.3004”, wrote Commerzbank analyst Karen Jones.