Intraday Market Thoughts

Merkel Awaits EFSF Vote, Latest Premium Trades

by Kyle Morrison
Oct 25, 2011 8:58

Angela Merkel faces key vote Wednesday ahead of EU summit, German, French and Italian consumer confidence set to fall further, Mervyn King to speak at House of Commons Treasury select committee, Bank of Canada rate decision and US consumer confidence due. Latest Premium trades (initially released 9 hrs ago) are below, including key daily & weekly oscillator charts.

In the game of poker that is the European debt crisis, German chancellor Angela Merkel faces a key vote in the German Bundestag on Wednesday on leveraging up the EFSF to over 1trn without any extra money being put on the line. How this will be achieved is not entirely clear, especially given that the ECB will not be involved in any way.

In any case the leveraging up of the EFSF is the least of Europe's problems given the increasing likelihood that the European economy is falling back into recession, after yesterdays PMI data indicating that the private sector is struggling.

This disappointing PMI data has reinforced fears of a recession and today's consumer confidence data out of both Germany and France is likely to show that confidence remains fragile with German Gfk consumer confidence expected to fall to 5.1 from 5.2, while French consumer confidence is expected to fall from 80 to 78 in October.

Italian retail sales for August are also expected to disappoint, falling 0.1%, the same as the previous month of July, while Italian consumer confidence is also expected to fall back for October to 97.6 from 98.5 in September.

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In the UK Bank of England governor Mervyn King as well as deputy governor Charles Bean are set to appear before the House of Commons Treasury Select committee to explain this months unanimous decision to restart the latest asset purchase program of 75bn, even though inflation remains at its highest levels in years and core CPI also remains well above 3%. Given the governors fondness for talking the pound down, one can probably expect more of the same.

The latest BBA mortgage approvals data for September are expected to show a modest improvement to 36k, but the numbers still remain low historically, even though they are probably likely to be the highest for six months.

In Canada the latest interest rate decision is due from the Bank of Canada as well as the latest retail sales numbers for August, while in the US consumer confidence for October could well improve slightly from Septembers figure.


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