By FX Empire.com
The EUR/USD volatility extended on Thursday and the fluctuations were heavy and evident with conflicting news and signals from the euro area, confirming that the leaders are still at odds and further downplaying chances of a comprehensive plan in the weekend summit.
We can see the mixed sentiment evident with investors reacting to leaked documents by Reuters, which said the Troika urged the release of the sixth tranche for Greece, while another suggested that the finance ministers are in talks to finalize buying bonds from the market and recapitalizing banks.
The loose ends are keeping markets on the edge and the volatility is exceptionally high. The focus on Friday will be on the Finance Ministers that are set to meet to discuss the debt crisis and reach common grounds ahead of the leaders’ summit, which investors hope can yield something, especially as EC President Barroso expressed his confidence that they can reach a positive agreement on how to expand the firepower of the EFSF.
More volatility is expected with the week coming to an end and no clear picture seen to what the summit might yield and unless the finance ministers can give investors something ahead of closing their positions ahead of the weekend which might prove to be a surprise, and therefore risk aversion and cautious trading might be more dominant this Friday.
Germany will end the week with more confidence figures with the IFO Survey for October at 08:00 GMT; the Business Climate Indicator is expected to drop to 106.5 from 107.5 the Current Assessment index to fall to 116.9 from 117.9 and the Expectations index to drop to 97.0 from 98.0.
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