By FX Empire.com
The sentiment remained downbeat and the fear is still dominant after the German comments and Moody’s warning to France which further weakened the euro and sent the EUR/USD to the downside.
On Tuesday investors remained wary over the outlook with the weaker than expected Chinese growth triggering fears over the outlook alongside the slump in European confidence.
We can still expect more volatility for the pair and downside pressure on the euro ahead of the summit next Sunday, especially after Moody’s warned France that it is at risk from increasing its support to bailouts and debt laden nations and said it might change its stable outlook on the French “Aaa” rating to negative, a signal that France might be pressured in the coming period whether in making moves or in extending its support leaving more doubt over the ability of Europe to contain the crisis.
We still see the markets highly uncertain of what comes next for the debt crisis and the global economy and on Wednesday we expect the jitters to continue to be evident, yet the euro weakness might start to slow as investors still bet on some progress next weekend.
The euro area will release the August Current Account at 08:00 GMT where the deficit might have narrowed from -12.9 billion in seasonally adjusted terms after the trade deficit narrowed.
At 09:00 GMT the Construction Output for August is due after it rose 1.4% in July and was higher 1.2% on the year.
The United States continues with the inflation data at 12:30 GMT with the Consumer Price Index for September. The CPI is expected to rise 0.3% on the month after 0.4% gain and on the year to hold at 3.8%, while Core CPI is expected to hold the monthly gain at 0.2% and on the year to rise slightly to 2.1% from 2.0%.
The data continues with the Housing Starts for September also at 12:30 GMT and expected to rise to 594 thousand from 571 thousand. Building Permits on the other end are expected with 2.4% drop to 610 thousand from 620 thousand.
The final release for the United States on Wednesday will be the Fed’s Beige Book at 18:00 GMT.
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