Market sentiment appeared to have improved in Asia Monday, probably amid the Greek parliament's approval of additional measures. European ministers and private creditors will decide this week on the rescue plan which needs to be approved before Greece's debt repayment due on March 21. Investors worried about that Greece might not be able to reach a deal with the EU/ECB/IMF troika after riots in Athens and other cities resulted in injuries to over 120 people. Despite the temporary soothe, Greece's future is still full of uncertainty. Germany's Vice Chancellor Philip Roesler stated that 'it is not enough just to give financial aid - they must tackle the second cause of the crisis, the lack of economic competitiveness...For that, they need ... massive structural reforms. Otherwise Greece will not get out of the crisis'.
China's preliminary trade report last week showed widening in trade surplus in January. Export growth slipped -0.5% y/y while import growth declined by -15.3%y/y, resulting in the widening of trade surplus to $27.3B, up from $16.5B in December. Although January's data was distorted by seasonal factors (Lunar New Year holiday), widening trade surplus might still add pressure on RMB appreciation. WE expect the issue will be discussed during Chinese Vice President Xi Jinping's visit to the US this week.
China's economic growth has eased since the second half of the year. Premier Wen Jiabao unveiled last week the government's plan to start 'fine-tuning' economic policies this quarter. This raised speculations that China will implement more easing measures to stimulate growth. If that's the case, reduction in reserve requirement ratio will probably be the first to come.
Commitments of Traders:
With the exception of crude oil, speculators were bullish towards the energy complex in the week ended February 7. Net length for crude oil futures decreased -1 814 contracts to 168 885. Net length for heating oil rose +7 514 contracts to 29 423 while that for gasoline rose +4 911 contracts to 88 783. Net short for natural gas futures dipped +57 contracts to 126 846.
Speculators were bullish on precious metals. Net length for gold futures added +6 148 contracts to 177 507 while that for silver soared +4 496 contracts to 23 587. For PGMs, net length for platinum gained +663 contracts to 25 639 while that for palladium gained +1 849 contracts to 10 544.