Investors are eyeing the developments from Europe with caution since Greece is planning to hold a referendum on the latest bailout plan and the austerity measures which could threaten Europe’s rescue process.
The gains that were seen within some markets this morning may be only temporary, since German Chancellor Angela Merkel and French President Nicolas Sarkozy will hold emergency talks with Papandreou ahead of the G20 meeting on Nov. 3-4 inCannes,France.
Since the Greek referendum will delay the next installment of aid funds from the IMF and EU, the process of fighting the debt process will become much more difficult, andGreecewill no longer be able to access the emergency funding that prevent it from default.
Caution and volatility will be sustained today by the FOMC decision set for later today, where the Feds may about a third round of quantitative easing to support the economy. Till then we are seeing some recovery from the losses seen yesterday since European officials called Papandreou for talks inFrance.
Even the disappointing data from Europe did not stand in the way of this recovery, where the German labor market continues to deteriorate signaling thatEurope’s economy is slowing down and a recession may be just around the corner.
The unemployment rate rose in Oct. to 7.0% from the previous 6.9%, while the PMI manufacturing inEuropefell to 47.1 in Oct. from the previous 47.3. But the developments in Greece, and the FOMC minutes and Bernanke’s press conference later today seam to drag more attention.
The US will also release today the ADP employment change and the EIA crude oil inventories report. The dollar index fell today from the highest of 77.58 to the lowest of 76.82 and as of this writing is trading around 76.97. As the dollar is weakening the yen rose again today and is trading around the 78.00 level.
The euro rose today to the highest of 1.3802 from the lowest of 1.3634 and now is trading around 1.3773. The pound rose from the lowest of 1.5913 to the highest of 1.6046 and now is trading around 1.6005. The AUD rose today trading as of this writing around 1.0367.
Despite the uncertainties surrounding the global economy, the falling US dollar brought gains to the commodities today. Oil prices were up today to $92.40 per barrel level from the lowest at $90.93, while gold rose to $1732.00 per ounce from the lowest $1714.10.
