By FX Empire.com
The EUR/USD extended the slump on Tuesday after the Greece unexpectedly called for a referendum on the new bailout, which triggered a wave of selling across the board on a highly anticipated no vote that will force Greece to default.
In an unexpected move Papandreou called for a confidence vote on his policies which is expected this Friday and also called for a national referendum on the new bailout which is expected by the end of this year or in January which warnings for started to rise.
Fitch Ratings warned that a no vote will force Greece into a disorderly default and eventually might force it to drop out of the euro area. The EU leaders have gone out of their way to find a good package to restore confidence but eventually the unexpected decision in Greece reversed all the progress made and sent markets to expecting the worst.
The EUR/USD is surely biased south with this new chapter now and the outlook does not look pretty now, as a disorderly default is all that the market has been trying to fight, and as soon as markets tried to normalize the new selloff started.
We still expect Wednesday to be focused on the debt crisis and the Greek fate as with time the fear of default is priced into reality. The FOMC will be a major focus for investors as well, as now the expected steady decision from the Federal Reserve is behind the curve with the evident threat and after the first victim in the US fell assuring that more will follow if the situation remains at the current new pessimistic expectations.
Investors now expect the Feds to say something about the developments in Europe and assure markets that they are willing to take more steps to secure their markets and the recovery.
Germany will start the session at 08:55 GMT with the unemployment figures for October, where the unemployment change gauge is predicted to show drop of 10 thousands from the previous 26 thousands. In addition, the unemployment rate is expected unchanged at 6.9%.
At 08:55 GMT Germany will also release the PMI manufacturing index final reading for October with expectations for unrevised index of 48.9.
At 09:00 GMT the euro zone will release the PMI manufacturing index final reading for October, where the index is expected to linger at 47.3.
The United States will join the session at 12:15 GMT with the ADP employment change for October, as employment is expected to increase by 101 thousand jobs from 91 thousand.
At 16:30 GMT the United States will release the FOMC rate decision, with expectations for a steady rate of 0.25%.
At 18:15 GMT, the Fed’s Chairman Ben Bernanke will speak at a Fed Conference to discuss the latest projections and outlook for the U.S. economy.
See what are the upcoming financial event on the FX Empire Forex Economic Calendar now.
