More Aid for Greece, Aussie Data Next

Markets took a rare interest in Slovakia on Tuesday as politicians there play a game of brinksmanship in the effort to approve changes to the EFSF. Moves in the forex market were mild with EUR leading and GBP lagging. Data on Japanese machine orders, Australian home loans and the first US vote on the Obama jobs bill are upcoming.

As we have repeatedly predicted, Troika inspectors said Greece will get the upcoming aid tranche after the Eurogroup and IMF approve their review (a formality). This news competed with political wrangling in Slovakia regarding the EFSF. Late in the session, Slovakias governing coalition was defeated in a confidence vote. The government will now reorganize and there will be a second vote later in the week.

There is a high likelihood that Slovakia will ultimately approve the EFSF, but this demonstrates to the market that further bailouts and/or changes to the EU constitution face a mountain of obstacles.

Economic data was second tier but noteworthy. The UK Niesr GDP estimate was 0.5% compared to the 0.75% BOC August forecast and the firm said the nation is suffering from a depression. In the US, the IBD/TIPP economic optimism index was at 40.3 compared to the 44.2 consensus. In Canada, housing starts rose to 205.9K compared to the 186.0K expected.

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Corporate profits will be in focus for the next month after Alcoa kicked off Q3 earnings season. The aluminum giants shares fell heavily after missing on profits but its worldwide demand forecast remained steady and it hike expectations for Chinese growth. Although the Chinese property market is a major risk, other worries about growth are appearing premature and this should support AUD.

Asia-Pacific Preview

The Senate is slated to vote on Obamas jobs bill Tuesday evening in the US. The result isnt likely to be market moving because the President said if it doesnt pass alone, it will be broken up into parts and re-introduced.

The top release of the session is Japanese core machinery orders for August. Expectations are for a 4.2% rebound after the 8.2% contraction in July. The data is stale but the risks are probably for a strong reading with other Aug indicators showing positive signs. The report is at 2350.

Two releases from Australia are upcoming. Westpacs consumer confidence at 2330 and home loans at 0030. Neither is likely to move AUD.