It seems like market participants are sleeping in this morning along with all of Spain. Markets opened with a yawn as low liquidity and directional USD buying set the morning FX trend. With no real market-moving data today, prices appear to moving counter to the little new information we did receive this weekend -- we suspect this intraday trend to reverse mid-day. Asian regional indexes are broadly higher while European markets opened flat following Friday's positive close compounded by the anticipation of a strong US earning's season.

In Japan this past weekend, the ruling DPJ party couldn't hold onto their micro-thin coalition majority in the upper house but were able to secure their strong control over the more dominant lower house. Credit agencies Moody and S&P were quick to issue statements that election results in Japan would have no direct effects on Japanese sovereign ratings, but both did mention that Japan's lack of a concrete fiscal strategy could threaten future ratings. Currently the JPY is operating under its safe-haven status and has a strong correlation to US yields. We suspect that mid-term market participants will soon turn their sovereign debt crisis crosshairs on Japan and some heavy Yen selling will ensue.

The Bank of Japan will hold their two day policy meeting this week. Although no change in the current 0.10% rate is expected, we're anticipating the central bank to release information pertaining to a lending scheme aimed at stimulating bank loans to commercial enterprises.

China kicked off the week by releasing a stronger-than-expect trade surplus, hitting a monthly all-time high record. Chinese June exports rose by a stronger-than-expected 43.9% y/y to USD 137.4 bn and imports came in at the softer-than-expected but respectable 34.1%. The trade surplus will likely contribute to mounting pressure to further allow the CNY to appreciate. In addition, the strong Chinese report will alleviate market concerns about the pace of the export recovery while demand from developed and emerging economies continues to recover at a steady rate. The Chinese numbers help to take the wind out of the double-dip recession-apocalypse conspiracy theories currently permeating the market.

Today's ultra-light economic calendar will further allow markets to give extra attention to the EU finance minister's probable comments pertaining to the EU bank stress tests. The German newspaper Handelsblatt reported that the stress tests will be more robust than originally chartered and cited the ECB's Stark that the assumptions will be made in a way that the test results will be credible. Barring any glaring failures or obvious mis-assumptions, the reports should be broadly positive for the Euro in the near term. Forex-Chart