By FX Empire.com
Amid a very volatile and mixed trading day, the market is starting to recover after early heavy losses in Europe, yet we can still see the mixed Wall Street opening.
The focus remains on Europe and the ongoing crisis as the finance ministers meet in Brussels and their decisions undermined by the ongoing uncertainty in Greece and now Italy.
Investors are focused on Italy as the political instability in the nation is stalling the reform which is forcing the nation to remain vulnerable to speculation and market pressure which already sent its borrowing costs to record. The G20 leaders pressed Silvio Berlusconi to act quickly as he agreed to allow the monitoring of EU and IMF to the reforms to ensure their swift implementations.
Nevertheless, the focus remains on his week political posture and the lack of support, a picture that was already reflected in Greece. The relief from Greece gave little room for markets to react but now we can see a slight and cautious recovery on the back of political transformation hopes that might steer Europe out of its crisis.
The coalition government in Greece was the first step, where it secured the nation away from referendum and towards its second bailout and in Italy we can see the same. The market reacted positively to news suggesting Berlusconi will step down and although they denied the rumors as unfounded the market still saw that the political leadership change in the euro area might be the start of the solution.
This speculation was the start of the recovery, yet as it was denied we still see caution and mixed trading evident with the starting hours of the US session.
The EUR/USD recovered from early lows set at $1.3682 to currently trading around $1.3775 down 0.3% from the opening of $1.3830. The USDIX lost the early gains to currently trade marginally flat around 76.93 after stretching to the high of 77.39 earlier in the day.
The recovery is spreading to commodities with the softer dollar and supporting Crude which also in return is helping lift US equities. The December crude futures turned positive and trading around $94.93 higher by 0.71% and gold is also trading higher on the ongoing uncertainty and the December COMEX contract is trading now higher by 1.33% at $1779.50.
More volatility is expected in the U.S. session with the lack of major data as eyes remain locked on Europe and developments from the euro area finance ministers, Greece and Italy.
Originally posted here
