So far the EU summit has delivered much more than expected: (i) ESM will be allowed to recapitalize banks directly once a supervisory body is established, (ii) EFSF will provide the aid to Spain until the ESM becomes available and importantly without seniority status, and (iii) the likelihood of bail-out funds being used to buy government bonds in the market has risen. As discussed previously, market expectations were very low, and long USD positions plenty, going into the summit. This is what allowed for the big spike in EUR/USD to 1.2628 overnight, as shorts were being stopped out. The question now is: how much has ... (full story)