Mid-Day Report: Risk Aversion Continues to Recede on Strong European Stock Rebound

[Forex-Outlook]

EU's announcement of a EUR 750b funding package as well as ECB's U-turn on bond purchases had huge impact on the markets today. The news was well received by markets with CDS on Greece fell over 250 bps to 650 level while that CDS on Portugal and Spain also fell over 160 bps and 80 bps respectively. European stocks are broadly higher with FTSE up over 5%, CAC over 8% while DAX is also up above 4.9%. Dollar and yen reversed last week's again and investors quickly pared back the risk aversion trades. Commodities are generally higher with crude oil back above 78 level.

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