Euro Debt Crisis Policy Still in Focus as FinMin Summit Continues

DailyFX

Currency markets remain fixated on Eurozone debt crisis management as a summit of the region’s finance ministers continues while Germany’s Merkel visits Greece.

Talking Points

  • Eurozone FinMin Summit Still Key as Draghi Speaks, Merkel in Greece
  • Greek Bill Auction May Reveal Markets’ Take on Euro Rescue Efforts
  • UK Industrial Output, Trade Data Unlikely to be Formative for Pound
  • Guidance in Q3 Earnings Reports May Shape Risk Sentiment Trends

Currency markets’ focus remains on a meeting of Eurozone finance ministers in Luxembourg as officials hash plans to continue fighting the region’s sovereign debt crisis. Against this backdrop, ECB President Mario Draghi is due to speak before the European Parliament Economy Committee while German Chancellor Angela Merkel visits Greece.

Traders continue to look for signs of reconciliation between Athens and “troika” monitors that open the door for disbursement of the latest batch of bailout funding. Guidance on the likelihood and timing of a Spanish request for a full-on rescue package is also sought.

The results of a Greek bill auction may offer a timely gauge of investors’ perception of policymakers’ progress, with markets paying eyeing average yield and bid-to-cover readings. The poster-child for the Eurozone debt crisis will attempt to sell €1 billion in 6-month paper.

The economic calendar remains relatively lackluster. UK Industrial Production is expected to decline 0.5 percent in August after surging 2.9 percent in the prior month. Meanwhile, the Visible Trade Balance deficit is expected widen to 8.5 billion. On balance, the releases are unlikely to prove formative for BOE monetary policy, meaning they will probably yield little in term of lasting British Pound direction cues.

Later in the session, the spotlight turns to the third-quarter corporate earnings docket. Chevron Corp, Yum! Brands Inc and Alcoa Inc are due to report results. All three companies are relatively sensitive to trends in the global business cycle, meaning traders will be keen to comb through their guidance on likely performance going forward to help shape risk appetite trends.

On the sentiment front, S&P 500 stock index futures are trading narrowly higher, pointing to a cautiously supportive mood that may put pressure on the safe-haven US Dollar. The greenback slumped as much as 0.2 percent on average overnight as Asian stocks staged a mild recovery.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

21:00

NZD

NZIER Business Opinion Survey (MoM) (AUG)

8

-

-4

21:45

NZD

NZ Card Spending (MoM) (SEP)

-0.6%

-

2.1% (R-)

21:45

NZD

NZ Card Spending - Retail (MoM) (SEP)

-0.6%

-0.3%

2.7% (R-)

23:00

NZD

QV House Prices (YoY) (SEP)

5.3%

-

4.8%

23:01

GBP

RICS House Price Balance (SEP)

-15%

-2%

-18% (R+)

23:01

GBP

BRC Sales Like-For-Like (YoY) (SEP)

1.5%

-0.2%

-0.4%

23:50

JPY

Trade Balance - BOP Basis (¥) (AUG)

-644.5B

-628.6B

-373.6B

23:50

JPY

Current Account Total (¥) (AUG)

454.7B

421.1B

625.4B

23:50

JPY

Adjusted Current Account Total (¥) (AUG)

722.3B

520.0B

335.4B

23:50

JPY

Current Account Balance (YoY) (AUG)

4.2%

-3.7%

-40.6%

0:30

AUD

NAB Business Conditions (SEP)

-3

-

0 (R-)

0:30

AUD

NAB Business Confidence (SEP)

0

-

-3 (R-)

4:30

JPY

Bankruptcies (YoY) (SEP)

-7.0%

-

-5.8%

5:00

JPY

Eco Watchers Survey: Current (SEP)

41.2

-

43.6

5:00

JPY

Eco Watchers Survey: Outlook (SEP)

43.5

-

43.6

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:45

EUR

French Central Government Balance (€) (AUG)

-

-85.5B

Low

6:45

EUR

French Trade Balance (€) (AUG)

-5000M

-4271M

Low

7:30

EUR

ECB’s Draghi Speaks at EU Parliament Econ. Comm.

-

-

Medium

8:30

EUR

Italian Deficit to GDP (YTD) (2Q)

-

8.0%

Low

8:30

GBP

Manufacturing Production (MoM) (AUG)

-0.7%

3.2%

Low

8:30

GBP

Manufacturing Production (YoY) (AUG)

-0.7%

-0.5%

Low

8:30

GBP

Industrial Production (MoM) (AUG)

-0.5%

2.9%

Medium

8:30

GBP

Industrial Production (YoY) (AUG)

-1.1%

-0.8%

Medium

8:30

GBP

Visible Trade Balance (£) (AUG)

-8500

-7149

Medium

8:30

GBP

Total Trade Balance (£) (AUG)

-2380

-1517

Low

8:30

GBP

Trade Balance Non EU (£) (AUG)

-4000

-2877

Low

9:10

EUR

Greece to Sell €1B in 6-mo Bills

-

-

Medium

10:30

EUR

German Chancellor Merkel Visits Greece

-

-

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2921

1.3032

GBPUSD

1.5984

1.6107

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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