EURUSD

The Financial Times reports that Italy is in talks with a 'China fund' for it to buy significant amounts of Italian debt. Greek Deputy Economy Minister Sachindis said Greece will run out of cash by the end of October if the next aid tranche is not released. A German government spokesman said that Germany assumes Greece is doing all it must to fulfill obligations; only troika can judge if Greece is doing enough. They also said that if Greece does not fulfill the troika criteria than it is automatic that the next tranche cannot be paid. EU officials said that the EFSF won't issue long-term bonds until governments approve the July 21 deal. The ECB said a total of EUR143 bn of purchases were settled under the bond buying programme to Sept. 9, from EUR129 bn the previous week, making the weekly numbers EUR13.96 bn. Bloomberg reported that French banks could face a downgrade as early as this week. This would force funding costs to rise again within the Eurozone financial system and pressure risk in general. We remain cautious on the EUR at current levels. The French finance minister said French banks have no liquidity or solvency problems and passed tough stress tests in July. ECB's Trichet repeated his calls from last weeks ECB meeting and said that central banks stand ready to provide banks the liquidity they require.

Daily resistance
 1,39771

Daily support
 61% fibo (1,29-1,48)  1,36431, next fibo level 76.4% is on 1,33623,1,34872