By FX Empire.com
The week started on Monday with a generally good run for the euro and improved market sentiment which was rather more an explanation to desperately needed relief after heavy selloff.
Investors saw hope that Europe is moving forward in containing its crisis. The spark was an unconfirmed report in Italian news paper La Stampa that the IMF is creating 600 billion euros loan for Italy with interest rate around 4 to 5 percent if the crisis worsened. The triggered helped the market open with a bullish gap yet soon after started to lose momentum after Italy and the IMF denied the report.
Nevertheless, the support was still seen with progress being felt on the EFSF where a draft according to media reports suggested that the facility might as soon as possible start to raise funds to allocate around 10 billion euros in emergency reserves to respond timely to any emergency for any nation and also might go forward in securing 20 to 30 percent of debt laden nations debt auction which will be in the form of tradable partial protection securities and will offer to expand the EFSF standing firepower by three times.
Those measures were presented to the finance ministers that are expected to start debating them on Tuesday when they meet in Brussels. The details will continue to flow our way and the relief rally needs more support from the finance ministers which will remain the focus on Tuesday.
They are expected to also discuss the next trance of 8.0 billion euros for Greece and that might also if approved help ease the tension over the political uncertainty in Greece over the opposition party’s stance.
We still see unstable market conditions evident especially after the OECD provided a bleak outlook for the global economy on the back of the debt crisis as stated that the euro area might already be in a mild recession.
In terms of fundamentals for Tuesday the euro zone will start the day at 10:00 GMT with the European Confidence data for November, where the business climate indicator could have dropped further to 0.23 from 0.18, while the consumer confidence final reading is expected to linger at -20.4, in the time the economic confidence could have retreated slightly to 94.0 from 94.8.
The industrial confidence is expected lower at -7.0 from -6.6, while the services confidence is expected to linger at 10.2.
TheUnited Stateswill join the session at 14:00 GMT with the S&P/CS 20 report for September, where the monthly S&P/CS 20 City index is projected to remain steady compared with the previous drop of 0.05%, in the time the annual S&P/CS composite-20 could have dropped 3.00% from the previous drop of 3.80%.
At 15:00 GMT the United States will announce the consumer confidence for November, with expectations it could have improved to 44.4 from 39.8.
As we said the data is not the highlight but the sentiment and the euro area finance ministers meeting in Brussels will be still the main focus for investors and accordingly choppy trading and volatility might return to be evident on the pair and might end the relief rally soon if they disappoint the market again with no conclusions.
Originally posted here
