European Markets Follow Asia Higher

European markets have opened higher after the European Union (EU) granted Greece another substantial tranche of money, however it does come with strings attached. The Euro Group of finance ministers, who met in Brussels on Monday, have given Greece another €6.8 billion ($8.7 billion) in new aid. This would be given Greece in installments which will allow the EU to keep pressure on the impoverished Greek nation to continue making austerity reforms. The first round will be awarded in July in the amount of €2.5 billion if Greece shows it is moving ahead with implementing punishing austerity measures needed to right the failing economy.

Asian markets rebounded today after China showed that inflation accelerated to 2.7 percent in June from a year ago. However, overcapacity problems continue to plague the world’s second largest economy, which led to producer prices falling for the 16th straight time.

STOCKS
In Asia, the Nikkei led markets by soaring 2.6 percent and the Australian benchmark, S&P/ASX, hit a one month high. The Shanghai was up 0.4 percent after a choppy trading session. At the time this report was written, the German DAX was up 1 percent with FTSE close behind, also up nearly 1 percent. U.S. markets closed last night after posting wins for 3 straight days. However, Intel (INTC) dropped 3 percent after analysts from Citi and Evercore slashed the chip makers ratings.

CURRENCIES
The USD/JPY (see the below chart) along with other JPY majors remain locked in a range type of trading. The USD/JPY is finding strong support at 100.80 and traded towards 101.25 as the Nikkei moved higher. The move higher seemed to have found resistance after the June preliminary report was released showing Japan had a 12.4 percent drop in machine orders. Yesterday the GBP/USD (Cable) saw an increase of 110 pips. The Cable started the day at 1.4857 and closed at 1.4968 and has moved higher today towards 1.5101.
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COMMODITIES
Gold (151.20) seems to have recovered a bit in early trading form a low of 1208.00. Gold sees a strong level of resistance at 1295.00 which could be a good area to short, should we see a test there. While Gold remains below 1365.00 the overall trend remains bearish. Silver (19.31), like Gold seems to found itself a decent support level for now around 18.50. While above that level we could see a test near the next resistance level at 20.00.

Today’s Outlook
The International Monetary Fund (IMF) will release its “World Economic Outlook today. IMF Chief. Christine Lagarde has been hinting that the IMF could be trimming global growth forecasts. However the IMF might have to rethink cutting the United Kingdom’s growth forecast earlier this year. The UK economy has grown better than anyone expected up 0.3 percent in Q1 this year, in data released earlier. The Bank of England has set a target of 0.5 to 0.6 percent growth for Q2.

EU Finance ministers will meet later today at the Economic and Financial Affairs Council (ECOFIN). Ministers will make a decision today whether or not Latvia will be allowed into the Euro Zone. On January 1, 2014.