Rumour And Counter Rumour

A mixed day for the markets yesterday as contradictory
feedback on the EU summit sparked volatility in the markets.  Firstly news fed through that the EU summit
on Sunday would be cancelled, then news emerged that there would be two
summits, one on Sunday and another by Wednesday.  The overriding feedback is still that we will
receive a comprehensive package by the 26th of October so by the Wednesday
summit.  Yesterday it was evident that
views were clashing as we steer dangerously close the proposed delivery date.

We saw riots in Athens as Greece managed
to pass the austerity law amidst fierce demonstrations.  The social unrest building in Greece is
gathering momentum as successive rounds of tax increases and cuts to wages bite
hard.  Although Greece has now
politically ticked the boxes ascribed by the EU- concessions may have to follow
if unrest continues to build.

For the currency markets we have not seen exaggerated
movements, however we are seeing volatility within current ranges.  The CHF was the big gainer yesterday and had
its best day in more than a month as jitters that the EU may fail in kicking
the Euro can down the road.   EUR/USD is
wildly swinging between 1.36 and 1.38. 
As we open today the mood has swung and risk is on as we approach the summit.
In GBP/USD we are seeing similar swings and currently we are up on yesterday as
the momentum is at the moment pointing to a definite package by Wednesday.

We expect another whippy day today and depending on whether
we get feedback from Sundays summit- Monday could be a lively open in the
markets.

Report By Phil
Mchugh