Daily Market Report 10/10/12

Looking to abate concerns that Greece may leave the euro, Angela Merkel’s Athens visit painted a united yet uncompromising picture as she urged the country to continue its austerity pledges.

In the face of further fiscal stringency, sky high unemployment and rock bottom confidence may prompt some of the Greek public to ponder the comparable pain that a Grexit would cause.

Still embroiled in a battle over further cuts of €13.5bn, Greece’s desperate troika resistance has caused mounting investor frustration as the European Stability Mechanism and Draghi’s bond buying scheme gather dust. This discontentment caused euro losses against many of its counterparts, including 

In the UK, poor manufacturing data and trade balance was alleviated by a surprise growth of 0.8% in the economy for Q3. This did little to change the general outlook however, as the increasingly obvious global downturn resulted in a day of strong gains across the board for the dollar and yen.the dollar, yen and sterling. 

Should the European exasperation continue without tangible progress, it is likely that safe haven strength will continue, to the detriment of the euro. On the other hand, should the leaders make headway with Greece’s evaporating liquidity, or Spain’s seemingly distant bailout, we could see a slight period of sustained optimism for the euro.

Key Announcements Today:

  • 07.45am – EUR – French Industrial Production: surprise growth of 1.5%, up from an expected 0.2% contraction
  • 09.00am – EUR – Italian Industrial Production: expected decline to -0.5%
  • 18.00pm – USD – 10y Bond Auction
  • 19.00pm – USD – Beige Book

See previous Daily Market Reports