The euro (Currency:EUR) is looking strong as it seems that a show-down over Greek debt repayments has been extended. European equity markets have opened slightly lower, but on the currency markets the morning belongs to the euro:
The euro dollar exchange rate is 0.3 pct higher on a day-to-day basis, EUR/USD is at 1.2966 at 9:43 AM in London.
The euro pound exchange rate is 0.21 pct higher at 0.8075.
IMF Managing Director Lagarde again advocated giving Greece an extra two years to meet its deficit reduction targets, despite the fact that IMF officials have yet to complete their review of Greek progress to date.
"So it seems that at least one of the three troika members is willing to show leniency. We expect European governments and the ECB will eventually come on board too, and that Greece will receive the next installment of external aid before year- end," says Gareth Berry at UBS.
ECB Executive Board member Coeure implied though that an expansion of Greece’s T-bill program to bridge any financing gap in the interim may not be possible in future.
Referring to the Emergency Liquidity Assistance program, he said “if further emergency loans to banks are purely for buying government bonds, then the ECB Council should not approve it".
"European equity markets are trading slightly lower in early trading giving back some of yesterday’s gains on mixed news overnight out of Asia where Japan for the third month running downgraded their view on the Japanese economy and China and Japan finally having agreed to talks about the disputed islands," says Markus Huber at ETX Capital summing up the context European markets find themselves in this morning.
Initially focus is expected to be on Euro-zone Industrial production data, after having rebounded last month, analysts are forecasting a renewed mild weakening more or less reflecting recent mixed European economic data and sentiment.
Also US earnings season is finally shifting up another gear today with banking powerhouses Wells Fargo and JPMorgan reporting their third quarter figures. Overall markets are expected to stay range-bound as traders are awaiting further developments concerning an aid package for Spain and how the US earnings season will be playing out.