FOREX: EU Ministers’ Summit, US Consumer Confidence Data in Focus

Talking Points

• EU Finance Ministers to Meet in Poland, Greek Aid Guidance Sought
• University of Michigan to Report US Consumer Confidence Rebounded
• NZ Dollar Gains as ECB Unveil Lending Facility for Euro Zone Banks

The New Zealand Dollar outperformed in overnight trade, rising as much as 0.4 percent against its major counterparts, as a recovery in risk appetite encouraged gains in the only G10 currency expected to see an increase in interest rates over the coming 12 months. The MSCI Asia Pacific regional stock index added 2.2 percent after the European Central Bank said it will coordinate with the Federal Reserve and other major counterparts to lend Dollars to the banks in the currency bloc to prevent a liquidity shortage arising as a result of the sovereign debt crisis.

Interestingly, S&P 500 stock index futures are flat ahead of the opening bell in Europe, hinting risk sentiment is far from robust despite the bit of supportive news out of the Euroland. All eyes now turn to the meeting of EU finance ministers set to kick off in Wroclaw, Poland and carry over into the weekend. Policymakers have preliminarily signaled not to expect major headlines out of the sit-down, but the attendance of US Treasury Secretary Tim Geithner at what is typically a purely European affair certainly bears consideration. At minimum, traders will be expecting guidance on the disbursement of the latest round of Greek aid due this month.

Later in the session, all eyes will turn to the preliminary University of Michigan Consumer Confidence reading out of the US. Expectations call for sentiment to rebound in September having hit the lowest level since November 2008 in the previous month. It remains to be seen whether such an outcome will be treated as risk-positive in terms of its implications for economic growth or risk-negative in that it chips away at the probability of another bold set of stimulus being unveiled at next week’s FOMC interest rate decision.

Asia Session: What Happened

Euro Session: What to Expect

Critical Levels

For real time news and analysis, please visit http://www.dailyfx.com/real_time_news

To receive future articles by email, please contact Ilya at ispivak@dailyfx.com