Currencies are mixed and are fluctuating heavily since opening the session in Asia today, where we can see instability in the market as investors are waiting for heavy and critical decisions from Europe, as other European finance ministers' joined the euro-area ministers in a meeting today to complete the final plan set to support Europe to overcome the debt crisis once and for all.
The U.S. dollar index (USDIX) started the day at 76.93, and recorded the highest at 77.17 and the lowest at 76.86, and is currently hovering around 76.98.
The euro fluctuated heavily today, yet biased to the downside with expectations that European ministers will disappoint investors as usual and will provide nothing critical to the market adding to concerns and jitters, especially when political decisions are awaited from Italy and Greece.
Starting with Italy, all eyes are focused on the parliament today, where the Prime Minister, Silvio Berlusconi faces a vote of confidence on last year's budget plan, which is expected to reduce the Italian budget deficit by applying further austerity measures; however, several lawmakers demanded Berlusconi to step down, which reflects political instability in Italy as the Prime Minister seems to lost his majority in the 630-seat parliament, adding to concerns that Italy might skip applying the measures and will not be able to handle the largest debt in the euro-zone.
Yields on Italian bonds climbed to all-time recorded since founding the common currency, which raised fears that Italy will follow Greece steps and the contagion will soon spread to the country unless European governments intervene quickly and tackle the contagion of the crisis.
With rising fears and concerns, Greece highlights the political platform as we can see Greek parties have not found common grounds to assign new Prime Minister to lead the coalition government, where after Papandreou announced that he will step down and will not lead the unity government, expectations indicate that Lucas Papademos, the former European Central Bank Vice President, will take his place and lead the new government; however, all eyes are concentrated on Greece with hopes it will end the political conflict as soon as possible to avert early default.
Finance minister pledged yesterday to hand Greece the sixth tranche of 2010's bailout package, but on the other hand, demanded the Greek Government to provide written acceptance of the second bailout deal along with showing commitment and act firmly to apply measures and reduce the percentage debt-to-GDP ratio.
The euro fluctuated heavily against the U.S. dollar after starting the session at 1.3771, where the EUR/USD pair recorded a high of 1.3791 and a low of 1.3723 and is currently hovering around 1.3772.
Moreover, Germany released the current account and trade balance figures today, showing that Germany was able to widen the trade and current account surplus beyond expectations driven by better exports and less imports in September.
The trade surplus expanded to 17.4 billion euros from the previous of 11.8 billion euros, while the current account surplus widened to 15.7 billion euros from 6.5 billion euros.
The sterling pound gained slight strength against the U.S. dollar after the manufacturing and industrial production indexes, where the GBP/USD pair opened the session at 1.6043 and recorded a high of 1.6100and a low of 1.6034, and is currently hovering around 1.6060.