The Euro is not just back above $1.25 in mid-day trading after the European stock markets have closed for the day… It is approaching $1.26 and the implied market chatter (which we call hope) could put the Euro within striking distance of the three-month highs of $1.27. While this is still cheap compared to recent years, it was just on August 15 that the low was under $1.22 and it was in July where we momentarily saw the Euro challenging $1.20 on the downside.  With Merkel back from vacation in Germany and speaking with Samaras on Friday, Samaras has pledged to make good on Greek debt but with more delays.  Now the question is Spain over whether or not it will finally capitulate and ask for a formal bailout in the second week of September.

The CurrencyShares Euro Trust (NYSEMKT: FXE) is up almost 0.45% at $125.03 and is back at the highest levels seen since July 3.  If the dollar is weakening, you know that is driving commodities higher:

Gold is higher by $9.71 to $1672.82 and that has the gold ETFs higher with the SPDR Gold Shares (NYSEMKT: GLD) is up 1.1% at $162.30 and the rival gold ETF of the ETFS Physical Swiss Gold Shares (NYSEMKT: SGOL) is up 1.04% at $165.32.

Oil is higher as well despite stock prices being down with a barrel up $0.48 at $97.74 so far today and that in turn has the United States Oil (NYSEMKT: USO) up 0.44% at $36.38 on the day.

Watch the currency markets here, with that being the Euro in particular.  At some point a stronger Euro won’t just be bullish for commodities.  All of those U.S. companies which warned that currencies were hitting their returns negatively could stand to benefit.

JON C. OGG