By FX Empire.com
The volatility controlled the EUR/CHF which was still biased to the downside despite the tight trading range as investors fear a great disappointment from the EU leaders.
All eyes remain on the summit and what the leaders will finally present. The leaders are not expected to disclose any information until late Wednesday which now as Europe exits the market leaves the reaction a key mover on Thursday as well, and likely for the coming period!
Choppy trading is evident with the parliament in Germany approving the space for Merkel to work on plans to expand the EFSF which excludes any more support from tax payers money. The options are available for the fund to be leveraged as a form of insurer and also an investment fund to purchase debt from the market and from governments.
The market is expecting the fund to not be short of a trillion and for banks support to at least come at 100 billion which is still below the earlier estimates of 200-300 billion. The final decision on Greece is also not finalized and investors want to see if there will be a haircut on the bonds which now is expected around 50%.
To the end of the European session on Wednesday investors turned more fearful and pessimistic and started to see little hope that the summit will present anything and that the measures will fall short of expectations which is pressuring the euro lower and for sure will send it further and violently lower if that fear materialized by the end of the summit.
On Thursday the market will react to what the final results are and accordingly will affect the pair, especially if a great disappointment is seen that might send the euro strongly lower and might even dare to test 1.20 floor, yet a strong plan will surely drive the pair higher.
The euro zone confidence figures for October are due at 09:00 GMT. The Business Climate Indicators is expected to weaken further to -0.15 from -0.06, the Economic Confidence is expected to drop to 94.1 from 95.0 while Industrial Confidence is expected to fall to -6.5 from -5.9 and the Services Confidence will decline to -1.3 from 0.0. Consumer Confidence is expected unrevised from the advanced estimate at -19.9.
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