By FX Empire.com
The markets are still trading with high volatility and we can see the dollar still the winning bet in markets amid rising jitters over the euro area’s outlook, where good news from Greece did not offset the volatility and fear with the focus on Italy now and its intensifying problems.
Investors did not react heavily to the news that Greece agreed to form a coalition government and move forward with the new bailout as the leader of the new coalition government is still not know and also there will still be the call for early elections which assures that the stability is far from near.
The jitters intensified with a critical vote in Italy tomorrow on the amendments to the 2010 budget in Parliament and Berlusconi is losing more support and might not be able to push through the budget, raising more questions about Italy’s stability.
The EUR/USD is still trading bearishly amid those prevailing woes and especially ahead of the euro area finance ministers meeting, where their debate on the EFSF and the other agreement from the EU October summit will be again overshadowed by the instability in the area.
The EUR/USD is currently recovering from early lows set at $1.3682 and trading still down by 0.50% at $1.3759 off early highs at $1.3830 were Reuters reported that the Italian Prime Minister might resign which somehow might solve some of the problems according to markets, yet the recovery is not seen to last.
Stocks also started to recover from the heavy losses since opening also on news that Berlusconi will resign. The STOXX 50 is trading lower by 0.53% at 2279.38 recovering from the earlier low hit at 2231.68.
The DAX also recovered and now slightly down by 0.07% at 5962.12 and CAC 40 is trading lower by 0.37% at 3112.04.
Investors are surely tracking the developments in the euro area and not focusing on the data that is also abysmal coming to think of it and confirming the fear of recession. Retail sales in the euro area in September slumped and German industrial production also contracted and was worse than expected.
The focus now turns to what the finance ministers will provide to quell rising jitters as investors wait the political developments in Greece and Italy to ease the ongoing financial strain.
Originally posted here
