Investors remained disappointed as the ECOFIN meeting last week failed to deliver additional measures to resolve the sovereign debt problems. The euro plummeted, leading the decline in stock markets in Asian session. In the commodity sector, oil slipped with the WTI contract for November delivery falling for a second consecutive day to 86.8/87.0 while the equivalent Brent crude contract dipping to 111.2/111.3. Gold climbed higher after rebounding strongly last Friday. Safe-haven demand increased again amid fears of European situation.

The ECOFIN meeting in Poland turned out to a non-event. Worse still, the situation in Greece appeared to have worsened as German Finance Minister Schaeuble have warned Greece that it will not receive the next 8B euro funding unless deficit reduction targets are met. Greek Prime Minister George Papandreou has cancelled his US visit, saying the coming 7 days are 'critical' for the country. US Treasury Secretary Timothy Geithner received cool response from EU finance ministers when he suggested the Eurozone to leverage up the EFSF. According to Jens Weidmann, Bundesbank President, 'the EFSF's sole purpose is the financing of states and that's in order as long as it's done via the capital market... If it's done via the central bank it constitutes monetary state financing'.

In the US, the most critical event will be the 2-day FOMC meeting on September 20-21. While going accommodative in monetary policy, the government seeks to raise taxes paid by the riches and companies. President Barack Obama is scheduled to call for a tax hike of 1.5 trillion as part of his long-term deficit reduction plan on Monday, though it may intensify the conflicts with the Republicans.

Commitments of Traders:

With the exception of crude oil, speculators were bearish on the energy complex in the week ended September 13. Net length for crude oil futures edged high to 165 395 contracts as price rose above 90 during the period. Net lengths for heating oil futures more than halved to 8 705 contracts while gasoline futures slipped to 43 842 contracts. Net short for natural gas futures increased to 183 700 contracts during the week.

Speculators were bearish on the precious metal complex. Net length for gold futures slid to 168 847 contracts while that for silver futures dipped to 26 287 contracts. For PGMs, net lengths for platinum and palladium futures dropped to 26 776 and 10 567 contracts, respectively, during the week.

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