By FX Empire.com
The EUR/USD saw enjoyed some relief gains on Thursday with investors eyeing some political relief in debt-laden nations and steps taken to shelter the nations from falling deeper in the crisis, and especially Italy.
The losses endured on Wednesday eased after Germany denied reports saying it is considering a smaller euro area and allowing nations to drop out of the single currency. More support came from Italy which sold 12-month treasuries meeting the target despite the surging yield, as the auction was met with strong market demand.
Greece also helped ease the uncertainty and political strain announcing the new coalition crisis government led by Lucas Papandemos and the new government will be sworn in on Friday.
We can still say that the strain is evident and the problems have not ended, especially for the new Greek government that will still take the nation to its second bailout. In Italy the stepped up the efforts and brought forward the vote on the new measures to meet the EU required reforms which the markets will focus on in the coming days.
Friday the parliament in Italy will provide the vote on new measures from asset sales to raising the retirement age to speed the political process and meet the reform target, especially as Italy agreed to IMF and EU monitoring of its progress. The second vote from the House of Deputies is also expected on Saturday and a confidence motion on the measures will soon after see the resignation of Berlusconi as he promised.
Investors will continue to eye the developments in the euro area and especially Italy on Friday and the choppy end of the week trading will be evident, especially as we still do not have political clarity for the next government. Berlusconi’s party softened their insistence for an early election and Mario Monti a former European Commissioner is seemingly the favorite to run a new crisis government, yet still we heard opposition to that option as well.
The United States will start the session at 14:55 GMT with the University of Michigan confidence in a preliminary reading for November, with expectations that the confidence could have slightly improved to 61.0 from 60.9.
Originally posted here
