EUR Unchanged Despite Improving Industrial Production

Italian tax cut; French and Italian industrial production rose; Italian auction. Markets turn to wholesale inventories and FED's Beige book.

Currencies are little changed, trading within a narrow range in the ongoing session. European equities are losing about 0.4%.

In a somewhat surprising move, Italian PM Monti announced an income tax cut designed to aid low earners. Also, the VAT will increase only 1% instead of 2% as initially intended. Today's risk events include a meeting between the Spanish PM Rajoy and French president Hollande in Paris and also the EU parliament debate regarding the banking union proposal.

The common currency did not benefit from French and Italian industrial production figures that were above expectations on both monthly and yearly basis. French IP rose 1.5% in August from previous 0.6% and Italian IP increased 1.7% after a 0.1% decline seen in July. EURUSD trades around 1.2870.

Italy reached a full take up as it sold 3 and 12 month BOTs totaling EUR 11 bln. The average yield rose to 0.765% from 0.7% respectively to 1.941% from 1.692% but cover has improved.

The data calendar for the US session is light today. Wholesale inventories are due at 10:00 am ET and they are expected to rise 0.5% in August from previous 0.7%. The key event is the FED's Beige book that is due at 2:00 pm. There are also two speeches, Minneapolis FED president Kocherlakota speaks at 2:25 pm and Dallas FED president Fisher at 4:45 pm. Audience questions follow both speeches.