By FX Empire.com
The EUR/USD continued the choppy trading on Wednesday with the clear mixed sentiment, cautious trading and prevailing fear over the outlook for the area with the risk of the crisis spreading and deepening.
The pair was trending mostly lower and only rose on temporary relief gains on news the ECB is buying heavily Italian bonds along with Spanish bonds to help calm the market and bring yields lower as they continued to soar. The news temporary supported the euro and the market in general and also brought the yields lower, yet soon after the market returned to its agonized state and the fears remained evident.
The market did not accept the Italian new cabinet with enthusiasm and did not have any effect on the market, even with expectations that it has the large backing in both houses of parliament. The main factor in the new cabinet is that Prime Minster Mario Monti will also be acting finance minister and that assures how technocratic the government is!
We still see heavy headwinds for the pair into the rest of the week with the focus on the euro area and no concrete steps that are calming the market with the alarm now ticking for France! On Thursday the market will remain tensed with French and Spanish bond auctions which investors will tune to closely.
The U.S. data will start at 13:30 GMT with the housing starts for October which is expected to drop to 610 thousand from 658 thousand and Building Permits on the other hand to rise to 600 thousand from 594 thousand.
At the same time we have the weekly jobless claims for the week ending November 11 after last week they unexpectedly declined to 390 thousand.
The data will end with the Philadelphia Fed Index for November at 15:00 GMT which is expected to improve to 10.0 from 8.7.
Originally posted here
