Euro made over 600 pips in intra-day swing movements. Markets were closely correlated to the comments we’ve been receiving from European leaders, especially related to the EFSF effectiveness to solve the European problems. News wires were full of contradicting comments that suggest that EFSF can save the Euro-zone followed by other comments that said that the actual ESFS is not enough. Stories (or rumors) about agreements and disagreements between France and Germany on the bail-out moved the markets furthermore.
With the ECOFIN (Economic & Financial Affairs Council) meetings this Saturday and the EU Economic Summit this Sunday. Markets are awaiting any significant move in order to catch the new developing trend. According to Franco-German statements, French president Sarkozy and German chancellor Merkel are will review the plan to “fix” the Euro-zone at the EU summit and will approve it by next Wednesday.
According the Figaro, France is preparing to cut 2012 GDP growth forecast. A forecast below 1.5% would induce a cut in spending and raising taxes to meet the 4.5% of GDP target. The Greek government secured the votes for the austerity plan with 154 in favor versus 144.
UK Retail Sales came out better than expected at 0.6% while it was expected at 0% with a previous number at -0.4%. The surprise came out from the Philly Fed Manufacturing Index with a +8.7 while it was expected to print -9.0 from a previous -17.5
Despite all the moves up and down, the single currency is still stuck in a sort of range between 1.3650 area and 1.3850 area. We’re expecting the range not to be broken before the week-end. As we said, the markets are awaiting the developments during this week-end.
The Pound is also stuck in a similar range between 1.5650 area and 1.5850. GBPUSD is expected to respect this range before the week-end with a most probable break to the upside.
German Ifo Business Climate printed this morning 106.4 versus an expected 106.3 and a previous 107.4. While the UK Public Sector Net Borrowing came out at 11.4B versus an expected 12.0B and a previous 10.9B.
Canadian Core CPI m/m is expected to come out at 0.2% versus a previous 0.4% while CPI m/m is expected at 0.1% versus a 0.3%.