Investors are thrilled by the comments from European officials and are anticipating big things to happen at the ECB meeting on Thursday. Market sentiment is positive with Asian stock markets surging, following the rally in Wall Street last Friday. Commodities also firmed amid reports that the ECB will re-launch the SMP together with EFSF primary market purchases. It is expected to consider granting the ESM a banking license. The benchmark Comex gold contract ended the week with gains of +2.23%. Crude oil prices lost during the week but the front-month WTI contract closed above 90/bbl for a second consecutive week while the Brent contract settled at a 3-digit level for the third week, signaling a return of market confidence.

Shortly after ECB President Draghi's comments on Thursday that the ECB would "do whatever it takes to preserve the euro", officials from Germany and France echoed on Friday their commitments on the Eurozone. The head of the Eurogroup Jean-Claude Juncker also stated that he has "no doubt that we will implement the agreements of the last summit. We still need to decide what we will do when. That depends on the developments of the next days...We will work in close agreement with the ECB, and we will, as Mario Draghi said, see results. I don't want to drive expectations, but I must say, we have reached a decisive phase...The euro countries have reached a point where we have to use all means possible to show that we are determined to protect the stability of the euro zone... nobody should doubt the will of those involved, to prove our determination".

These encouraging comments have driven strong anticipating of actions from the ECB at its monetary meeting due Thursday. Possible measures to be announced include joint intervention by the ECB and the EFSF/ESM on the peripheral bond markets, additional relaxation on collateral and liquidity by the central bank. Yet, the ECB intervention has been opposed by the Bundesbank and Draghi is expected to meet with Bundesbank President Jens Weidmann 'over coming days'.

Other than the ECB, the 2-day FOMC meeting is also at the centre stage. While we do not anticipate announcement of QE, it's possible for the Fed to extend the low rate guidance to 2015 at the policy statement. The US GDP gained +1.5% in 2Q12. This came in slightly above market expectation as driven by consumption, particularly in the services sector. The employment report for July will be out on Friday with the market currently anticipating an increase in payrolls by +75K.

Commitments of Traders:

Speculators were mixed towards the energy complex in the week ended July 24. Net length for crude oil futures rose +17 914 contracts to 190 693 while net shorts of heating oil fell -932 contracts to 3 081. Net length for gasoline increased +9 222 contracts to 69 437. Net short for natural gas futures fell -3 669 contracts to 72 375.

Speculators were bearish towards precious metals during the week. Net length for gold futures slipped -15 982 contracts to 112 977 while that for silver gained +503 contracts to 8 159. For PGMs, net length for platinum decreased -792 contracts to 18 564 while that for palladium dipped -619 contracts to 4 216.