Markets Lift as Germany Approves EFSF

The dollar largely reversed most of its overnight gains in anticipation of European Financial Stability ratification vote by Germany, which was passed by 438 votes. The boost to market sentiment lifted European stocks, with the Euro Stoxx 600 advancing by 0.3% led by a 2% move higher in banking shares. Asia shares closed mostly positive after paring back early session losses.

What's more the Euro Stoxx 600 Bank Index has rallied by nearly 2% or more in four of the last five trading session. The European economic calendar today was mixed. German labor jobless numbers came in better than expected, while the August European Commission Economic Confidence dropped more than feared -- at the lowest level since 2009. Elsewhere, UK mortgage approvals rose by the most in roughly two year, while net mortgage lending fell and UK Nationwide house prices remained soft, justifying comments from the Bank of England's chief economist, Spencer Dale, who hinted at possible QE2.

The political wrangles of the eurozone continue, with the aftermath of the German EFSF ratification vote expected to set the tone for the North American session. The clear backing is likely to give reassurance to German Chancellor Angela Merkel and with the vote out of the way the government may be more open to discuss further changes to the EFSF.

Elsewhere, in the U.S. we have initial jobless claims (which continue to show a gradual improvement in the employment picture, at odds with most other employment figures) and we are also expected to see Q2 GDP revised higher.

In Latin America today Brazil wholesale IGP-M for August is due out and expected to ease to 7.45 year-over-year from 8.0% in July. However, the month-to-month rate is seen rising to 0.62% from 0.44%. The central bank will also release its Q3 inflation report. Brazil is reportedly mulling more fuel tax cuts to help fight inflation.