Eurozone, UK PMI Due out in Sea of Green

Merkel and Sarkozy set to meet Papandreou, Growth fears remain in focus as European manufacturing PMIs expected to remain weak, German unemployment set to fall, UK construction PMI set to follow manufacturing into contraction, US ADP and FOMC due later in the US. Link to latest Premium Intermarket Trades is below.

Greek Prime Minister Papandreou convinced his cabinet to back his referendum policy and make it one on euro membership. Obstacles still remain not least the PMs parliamentary majority which remains wafer thin. The Greek PM is due to meet Sarkozy and Merkel later today in Cannes to discuss the latest developments, where it is expected that they will make it clear that there is no alternative to last weeks deal. There has been speculation in some circles that the next IMF aid tranche could also be withheld if the referendum plans go ahead. In any case it remains uncertain if the Greek government will survive the week with a confidence vote expected by the end of the week, which suggests even more delay and uncertainty.

The upcoming Eurozone PMIs shall be accompanied by nagging worries of a double dip recession in Europe, with the final release of manufacturing PMI data for October, from Germany, France, Italy and the Eurozone with all of them expected to remain wither in contraction territory or quite simply stagnant. Italian PMI is expected to slide further to 47.2, increasing fears that Italy will be the next shoe to drop as its five and ten year bond yields surge through 6%. French manufacturing PMI is expected to come in at 49, while the German equivalent ifs expected to stay at 48.9, while the Eurozone measure is expected to post a flat reading of 50, though it is more likely it will come in lower.

German unemployment , on the other hand is expected to fall once again, this time by 10k while the unemployment rate is expected to stay at 6.9%.

Yesterdays disappointing UK manufacturing PMI numbers overshadowed the better than expected Q3 GDP numbers and raised fears that the last quarter of 2011 could see a contraction in the UK economy. Todays UK construction PMI is also expected to slip back into contraction territory to 49.8, from Septembers reading of 50. Despite yesterdays disappointing manufacturing reading of 47.4, the key indicator remains tomorrows services PMI because it makes up over 60% of the UK economy.

In the US the latest ADP numbers for October are due as is the latest monetary policy decision from the FOMC at its penultimate meeting of 2011.

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