EURUSD Below 1.37; Awaiting Another Conference

Euro extends selloff, EURUSD below 1.37, metals add on to gains, ECB's Liikanen talks of rapidly deterioration in global situation, NAHB Housing market index is next; later teleconference between EU/IMF and Greece. Dow futures -128 pts, S&P500 futures -17 pts.

The common currency continues to weaken amid mounting concerns over Greece. After gapping sharply lower on Asian open, EURUSD recovered a portion of its losses. However, the recovery was short lived and London traders pushed EURUSD below previous lows all the way to 1.3635 wiping all the gains Euro made as a consequence of last Thursday's liquidity measures.

The Greek situation continues to weigh in on the markets as EUR 8 bln was withheld by ECB/EU/IMF troika and Greece finances will last only a few more weeks. Additional austerity measures that are likely to be demanded will be difficult to pass given the opposition. Calls for new elections by the leader of the opposition were dismissed but show how divided Greek political scene is during this turbulent time.

Overall sentiment is worsening, sending most European equity markets deep in red, after ECB governing council member Erkki Liikanen said that the outlook for the world economy has rapidly deteriorated and that the Eurozone faces substantial downside risks. He also added that if Europe fails to constrain the crisis, it could undermine global growth.

There is only one data release during the NY session at 10:00 am ET. The National Association of Home Builders releases its Housing Market index that is expected to remain steady at 15. Throughout the year, readings have been within a narrow 13 and 17 range.

Greek finance ministry announced that a conference call between EU/IMF and Greece will take place at 12 pm ET which could prove to be a market mover. The CAD could also experience a degree of volatility at 2:00 pm when BOC governor Timothy Lane speaks in Toronto.

The key event this week will be undoubtedly be FOMC meeting scheduled for Tuesday and Wednesday. Should the FED announce "Operation Twist" the net effect could be USD positive. More on Operation Twist In Ashraf's premium piece here: http://ashraflaidi.com/products/sub01/access/?a=496