By FX Empire.com
The EUR/USD fluctuated on Tuesday as all eyes remained on the Slovak vote on the expansion of the EFSF powers, especially as the tension inclined after the prime minister threatened to quit if the vote does not pass.
The volatility was evident and with the end of the European session the effect of the final voter will continue to linger till Wednesday where all euro parliaments need to ratify the changes to the EFSF firepower to be activated.
This pending vote had its toll on the pair amid jitters that the deadlock between lawmakers might result in a catastrophe for the euro area and the progress in containing the debt crisis.
Already the overall jitters have eased, especially after the troika said that Greece is likely to receive the next tranche of last year’s bailout by the beginning of November easing the fear of default and the block of the aid loans. Still the debate is ongoing on the how to contain the crisis especially as the EU bought more time by delaying the summit from next Monday till October 23 to assess the report from the troika on the progress in Greece and finalize their view on the new bailout that still sees mixed views over the increasing the private sector’s participation.
We still see the debt debate predominant and will control the pair on Wednesday especially as investors await the final vote from Slovakia.
The euro area is set to release the Industrial Production for August at 09:00 GMT which is expected with 0.7% drop after 1.0% rise and to rise 2.2% on the year following 4.2% rise.
In the U.S. session the focus will be on the FOMC minutes for the last meeting when the Fed announced “operation twist” and with the lack of major fundamentals investors will keep their focus on the minutes for any hints for the coming move from the Federal Reserve.
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