By FX Empire.com
The EUR/USD fluctuated heavily on Wednesday with upside tendencies as the correctional move continued after the heavy selloff seen since the start of the week.
Investors saw that the EU leaders are likely to counter the Greek surprise and use political pressure to undo the damage as they summoned Papandreou for talks in France ahead of the G20 summit in which they are expected to tell him Greece has no other way but to take the bailout as the consequences are disastrous on the euro are and the global economy.
On Thursday investors will surely react to any news from the meeting and also trading will be cautious and within tight ranges and volatility ahead of the ECB rate decision.
Despite that median estimates are for steady rates from the ECB at 1.50% some are still preparing for a surprise by the bank. Nevertheless, the main focus will still be on Mario Draghi as he chairs his first policy meeting and his press conference which the market expected to include a signal for a rate cut in December to revive growth after macroeconomic data confirmed the deteriorating pace of growth with main sectors contracting.
The G20 two-day summit also will start in France and investors are also closely watching any comments or decision from global leaders. The bets are on the IMF and how the fund will be used to contain the crisis with the discussion of direct credit lines to nations that might ease the market, yet for now investors see that it is only temporary relief especially that the loans might be very little to cover the huge debt load from Italy or Spain!
The United States will start the day at 12:30 GMT with the nonfarm productivity for the third quarter in a preliminary reading, which is expected to expand by 2.5% from the prior drop of 0.7%. In addition, the unit labor costs for the same period is expected to drop by 0.4% from the previous expansion of 3.3%.
The United States will also provide markets with the initial jobless claims (October 28), which was 402 thousand in last week.
At 12:45 GMT the European Central Bank will announce interest rates, which is expected unchanged at 1.50%. The focus will be on Mario Draghi and the press conference at 13:30 GMT for signals over the coming move from the ECB.
At 14:00 GMT the United State swill release the ISM non-manufacturing composite for October, which could have improved to 54.0 from 53.0.
Moreover, the United States will release the factory orders index for September, with expectations for 0.1% further drop from the previous 0.2%.
