Euro Slips on German & Ezone Manuf Contraction

Focus on Wednesday's EU summit; German manufacturing sector contracts, but service sector grew; Eurozone PMI declined further and industrial orders rose. NY session can see higher volatility during two FOMC member William Dudley speeches. The German contraction that Ashraf is at its early stages see the chart on the left here: bit.ly/p9MIMn For the latest on Premium Trades, see below. Ashraf will be on AlArabiya at 12:30 GMT (16:30 Dubai time)

Another European meeting ended with no concrete conclusion yesterday. The next EU summit which is on Wednesday is in focus now and is likely to be a key event this week. Risk on sentiment may continue to support equities and punish the USD on hopes that EU leaders are closer to a debt crisis solution. However, as markets expect the Eurozone to announce concrete steps with significant provisions, risk aversion can return with a vengeance should the Wednesday's summit come to a close with no specific results.

Data from Germany was mixed today as German manufacturing sector contracted for the first time in more than two years. Manufacturing PMI printed 48.9 in October from previous 50.3. However, German services sector expanded as services PMI increased to 52.1 from 49.7.

In the Eurozone, manufacturing PMI has contracted for three months in a row as it printed 47.3 from 48.5 and services PMI declined to 47.2 from 48.8 deepening fears of a recession. New orders sub component has also been declining for three months which points to an additional weakness in the months ahead. EURUSD fell on the news from 1.3900 to 1.3843. Session low is 1.3822.

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Eurozone industrial orders grew solid 1.9% in August after declining -1.6% in July. However, on annual basis orders grew only 6.2% from previous 8.9%.

There is no data due during the US session today. Market volatility could increase at 8:45 am ET and also at 1:00 pm ET when NY Fed president and FOMC member William Dudley delivers speeches and answers audience questions in New York.