Euro Holds on EFSF Talk, UK CBI Sales Disappoint

German GfK consumer confidence unchanged, Swiss consumption declined sharply; UK CBI sales fell further. Markets turn to US Home price index and Consumer confidence data, Dallas Feds Fisher on why he voted against the Twist. Details on Ashrafs Premium trades below.

CHF was unaffected when Swiss UBS Consumption Indicator declined sharply to 0.79 from 1.28 in August confirming fears mentioned in last week SNB's quarterly bulletin that the Swiss economy could experience a significant slowdown in the months ahead.

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EUR is holding steady above the 1.35 level suggesting the possibility of short term strength. German GfK Consumer confidence underpinned the currency as October's survey came unchanged at 5.2 defying fears of a recession and market turbulence. However, the Economic Expectation sub-index fell sharply to 4.8 from 13.4.

UK CBI sales in September fell to -15 from -14 which is the lowest print since May 2010 and the latest confirmation of slowing economy. Retailers expect sales to decline further next month as 3M moving average of sales declined by 11%. GBPUSD may come under renewed pressure as the case for additional QE grows.

Yesterdays equity rally was founded on hopes that EU leaders may be finally ready to take the required steps necessary to deal with the crisis in Europe. One hope is that leaders are considering an increase or leveraging up of the bailout fund (EFSF). This step has raised the political temperature in Germany with fears that unless assurances are given the vote in the Bundestag on the extension of powers of the EFSF, could well get voted down. The head of the German constitutional court has already gone on record as saying politicians do not have the legal authority to make any agreements that violate or impinge on German national or fiscal sovereignty.

Any vote to increase the EFSF by the back door would do that and any such measures that impinge on German sovereignty must be put to a referendum of the people.

Greek PM Papandreou is due to meet Angela Merkel in Berlin today at the same time as the Greece parliament votes on the new austerity measures including the property tax.

The New York session will bring S&P/Case-Shiller Home Price index index at 9:00 am ET that is expected to continue its contraction by -4.4% in July from -4.5% in June

US Consumer confidence is due at 10:00 am ET and is seen higher at 46.2 in September from 44.5 in August. Market volatility could also increase at 1:20 pm ET when Dallas Fed president Richard Fisher delivers a speech titled "Why I voted against Operation Twist".

K Morrison & P Urban