UK PMI Deepens Contraction; Euro Below 1.37, ISM Manuf Next

Risk aversion and Greek politics send Euro lower; Swiss PMI disappoints, UK PMI plunged and GDP data was mixed. EURUSD dropped below 1.37 testing its 100 WMA. ISM manufacturing and construction spending is next. Intermarket Insights will be due at 9 EST, 13:00 GMT.

The greenback soars across the board as heightened risk aversion that started yesterday continues. European equities are deeply in red, losing over 2%.

USD strengthening that started yesterday after BOJ intervention continued as MF Global filed for bankruptcy and Greek PM Papandreou announced a referendum to approve the EU bail out deal. The political damage that this step caused is likely to cause problems in future EU negotiations as Eurozone leaders must be troubled by the PM's decision. Strong a stable political situation in Greece, necessary for the implementation of the unpopular austerity measures, might come under pressure as confidence motion is scheduled to begin on Wednesday. EURUSD has lost nearly 500 points since Monday and fell to 1.3673.

Swiss data continues to deteriorate as SVME PMI declined further to 46.9 in October from 48.2 which is a second back to back contraction and the lowest print since mid 2009. The CHF was weakening even before the announcement and rumors were circulating that the SNB was checking rates. Any SNB involvement has been unconfirmed.

In the UK, manufacturing PMI plunged to 47.4 in October from 50.8. This is the weakest print since 6/2009 and it implies that the expansion, albeit a small one, we witnessed in September was only a temporary improvement amid deteriorating trend.

Today's GDP data was mixed: Q3 GDP grew 0.5% q/q stronger than previous 0.1% but annualized figure declined to 0.5% from 0.6%. Despite the q/q improvement, the outlook for the UK economy continues to be gloomy. GBPUSD fell on the news from 1.60 to 1.5930. Sterling continues to trade heavy near session lows.

The NY session will bring ISM manufacturing at 10:00 am ET that is expected stronger in October at 52.1 from 51.6 a month earlier. September construction spending is seen lower at 0.3% from 1.4%.