Awaiting Berlusconi & SNB's Hildebrand

Italian 10 year yield continues to surge; German data surprised with exports at record highs; Swiss consumer sentiment declined further; UK manufacturing production increased. Market turns to Canadian housing starts, SNB Chairman Hildebrand is due to speak and probably further push up EURCHF.

In Italy, PM Berlusconi will make a decision whether to resign or not after today's confidence vote due at 14:30 GMT as the pressure on Italian bonds increases. If Berlusconi fails to get 316 votes, he would have to face a confidence vote that will decide his future.

Italian 10 year reached a new high at 6.74% but has eased a bit to current 6.65%. Italian-German spread is currently 4.82%. In Greece, senior officials said that new PM will be announced tomorrow.

After a long series of disappointing data, German economy showed a sign of resiliency. German trade surplus increased to EUR 17.4 bln in September from EUR 11.8 bln in August and current account surplus increased to EUR 15.7 bln from EUR 6.5 bln. Exports grew 0.9% m/m which is the highest print since data started to be collected in 1990. However, as many markets that import German goods experience considerable slowdown, it is likely that even exports will decline in coming months.

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More news supporting CHF bearish bias came in the form of October consumer sentiment that declined to -24 from previous -17. Quarterly confidence survey has been declining gradually since the beginning of the year. Consumers expressed fears of future higher unemployment that has been unchanged at 3% for six months.

In the UK, industrial production was unchanged in September but declined -0.7% on annual basis while manufacturing production increased 0.2% m/m and rose 2% y/y. Overall the news is slightly positive as industrial production has a lower impact on GDP growth. GBP is also benefits as traders have been focusing on Greece and Italy.

Canada housing starts due at 8:15 am that are seen slightly lower in October at 198K from 208K.

SNB chairman Hildebrand participates in a discussion at the European finance forum at 8:30 am. Considering the 200+ pip weakening of the CHF since Friday's close as a result of SNB chairman's comments, the market seems to anticipate further steps, possibly in a form of higher EURCHF floor. Any comments regarding the Franc strength could send the Swiss currency lower.

November IBD/TIPP economic optimism index is due at 10:00 and is expected higher at 42.5 from 40.3 and GBP volatility could increase further as NIESR releases its GDP estimate at the same time.