. Dealers pared exposure to higher-yielding currencies in reaction to renewed European sovereign credit woes and an outlook for weaker economic growth in the U.S. and China. More economists and market-watchers are starting to suggest the U.S. economy could be headed into a "double dip" recession while others suggest the U.S. economy may simply be moderating to annualized growth of 1.5% or less. Dealers are also reducing exposure to some U.S. assets as tropical storm Alex develops in the Gulf of Mexico. The European Central Bank stoked concerns today when it announced the amount it has expended in purchasing covered bonds exceeds the initial €60 billion cap it implemented twelve months ago. Also, the ECB failed to drain all of the liquidity in one of its regular operations to neutralize the impact of its EMU-16 government bond purchases. The ECB sought to absorb €55 billion but only absorbed €31.9 billion. ECB member Nowotny reported the low level of eurozone inflation has given the ECB "room for maneuver," a possible indication the central bank may expand its bond-buying program. Traders reported Eurosystem central banks increased their purchases of Greek, Irish, and Portuguese securities today. There is also pessimism ahead of 1 July as banks have to repay €442 billion, the ECB's first twelve-month loan. Spanish finance minister Salgado said she hopes the "ECB is conscious of the needs of our financial system." A draft European Union document notes stress tests on European banks need to incorporate sovereign debt risks. Data released in the eurozone today saw the EMU-16 June business climate indicator remain steady at 0.37 while June industrial confidence and June consumer confidence were also unchanged. June economic confidence and services confidence ticked marginally higher. Also, French June consumer confidence ticked lower to -39.
In U.S. news, data released today saw CaseShiller home prices
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[/caption] The S&P500 emini futures rallied up to 1059 with practically a 50 point range including after hours. This rally came on 2.6 million contracts. This is very light reversal on the previous 7 day down trend. If this breaks above 1080, it will be quite remarkable and we could see some more resistance to the 200ma at 1100, as signified by the solid red line. A retracement to 1036 would keep this down trend in tact. Looking for support at 1036 then 1029. 
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