Today's EU Summit is expected to draw the market attention in hopes that Spain may finally request financial aid to deal with its growing debts and perhaps Torika will surprise and announce Greece's problems are being resolved at a steady pace. Let's first recap what the market has to digest aside the EU Summit in Brussels.
S&P credit rating agency downgraded Madrid and Barcelona after country downgrade. Cyprus also took a hit from the US rating agency, reasoning the country's creditworthiness has deteriorated significantly. Cyprus' credit rating was downgraded from BB to B:
"We consider that deterioration in the banking sector's domestic loan book has increased uncertainties about the final cost of Cyprus' banking crisis, and the implications of this for the government debt burden. We are therefore lowering our long-term sovereign credit rating on the Republic of Cyprus to B from BB."
Greece and China GDP
It is also important to highlight that the Greek Finance Minister said the market should not keep its hopes high on today's EU Summit as an emergency meeting is due at the end of the month about Greece. China GDP came in as expected, which does not contribute to the positive sentiment in global markets as the GDP did contract from 7.6% to 7.4%.
There are really no major headlines that can assist the current uptrend in EUR/USD. Comments from EU leaders can generate bullish spikes in Euro-dollar but I would expect it to be short-lived as profit-taking is likely to materialize once the market is disappointed.
EU Summit Full Schedule
Below is the full timetable for the EU Summit for 18/10/12 - 19/10/12:
EU Summit Schedule for Thursday:
14:15-14:45GMT Arrival of members of the European Council at the Justus Lipsius building
15:00-15:30GMT Exchange of views with the President of the European Parliament Tour-de-table before the meeting
15:45-1800GMT First working session
18:00-2000GMT Working dinner
End of meeting Van Rompuy & Barroso press conference
07:15-07:45GMT European Council members arrive Justus Lipsius building
08:00-11:00GMT Second working session
End of meeting Van Rompuy & Barroso press conference
Followed by Working lunch of Heads of State or Government of Eurozone
End of meeting Van Rompuy & Barroso press conference
Spain Bond Auction
Forex traders will focus on the upcoming debt auction from Spain. Off-the-run 3-year 4.00% 2016 Bono, 4.25% 2016 Bono and 10-year benchmark 5.85% 2022 Obligaciones will be issued for between
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