EURSD has been going sideways for the last couple of days on the eve of the summit.

It’s not sure how much confidence the Euro will gain in the markets but I would not be surprised if it breaks 1.28 back again. It is still important to note that the uncertainty in the markets is high.

That would mean the next support would be at around 1.17 which a 7 year low. I don’t think, however, it will go that far as the focus will likely shift away from Europe eventually and the Euro will have to bounce back.

This forms a downtrend in EUR/USD on a daily chart and reaches the lows of the beginning of the year, it as broken the support of 1.3000. It is possible that with a continued bearish pressure in Europe EUR/USD will break the 1.2650 support as well.

The FT article Wed morning (“Trichet hints at bond purchase rethink” http://bit.ly/hDX3JQ) seemed to spark speculation of a major unveiling Thurs morning, although it doesn’t seem like the ECB will do much more than back away from its aggressive exit strategy rhetoric express confidence in the eurozone economy and the euro itself (specifically this morning, Reuters is reporting that Trichet will pledge to keep its unlimited 3-month operations in place but will not announce massive new bond purchases; the FT Alphaville writes that many leading economists are downplaying the chances for a “shock and awe” announcement and are preparing for a disappointment http://bit.ly/ijMsEW).

There was some confusion Wed around 12pmET, when Reuters crossed a headline stating that the US was considering bolstering the eurozone bailout fund via its contributions to the IMF – this caused the SP to spike another 5-6 points and stocks held those gains despite the story being denied by the WSJ (overnight a few US officials, inc. Rep Pence, spoke out against the idea of the US contributing financial assistance to Europe).

The most important catalysts will be on the economic front. We will get the Nov manufacturing PMI/ISM readings (China hits late Tues night and the US comes Wed morning) as well as the US jobs report on Fri 12/3 (the St is looking for 143K in total non-farm adds; recall the Oct BLS reading was pretty encouraging). The Beige Book will be published on Wed 12/1 and also is in focus. On the corporate front, we will get auto sales on Wed and retail same-store-sales on Thurs (the retail sales releases will give companies an opportunity to update the St on how Black Friday went). ALTR and LSTR both will be publishing mid-Q updates (the first such updates for the CQ4). There are a few more Oct-end earnings (OVTI, ARO, SNPS, AVGO, TOL are among them). Looking towards Washington, the White House will host a summit on Tues 11/30 between Obama and the new GOP leadership (as far as the market is concerned, the big topic will be the fate of the Bush tax cuts). This coming weekend (Nov 27-28), we could see news on the Ireland bailout front (on Fri, press reports indicated that a formal aid package for Ireland could be unveiled this Sunday 11/28). The ECB meeting on Thurs 12/2 will be very important as the bank will discuss its exit strategies for 2011. Also – the US carrier group (led by The George Washington) is due to arrive off the coast of Korea and will be conducting military exercises w/the S Korean government starting Sunday (this will raise the risk of more altercations).

Black Friday Preview – Sentiment heading into Black Friday is significantly more positive this year vs. last year. The schedule for feedback on how Black Friday/Holiday 2010 are trending will kick off with the parade of CEO comments on cnbc Friday morning (in previous years, appearances have been made by Macy’s, BBY, JCP, etc.), be followed up by surveys/reports from ShopperTrak (typically hits on Sat. & Mon.), the National Retail Federation (typically hits on Sunday), SpendingPulse, RetailMetrics, ISI, PayPal, comScore, etc. over the weekend/Monday and then some company press releases (i.e. WMT released anecdotal Black Friday comments last year). The ultimate recap of Black Friday sales will come on Thursday with Retailers’ November Same Store Sales reports

Irish Banks – S&P To Assess Impact Of Irish Downgrade On Banks – The consensus is that the fortunes of the Irish banking system have become very closely intertwined with those of the Irish sovereign and that the sovereign downgrade could have a negative impact on the creditworthiness of the four rated domestically owned Irish banks, namely Allied Irish Banks PLC (BBB+/Negative/A-2), Anglo Irish Bank Corp. Ltd. (BBB/Watch Neg/A-2), Bank of Ireland (A-/Negative/A-2), and Irish Life & Permanent PLC (BBB+/Negative/A-2). S&P

Ireland – PM Cowen has refused to accelerate the publication of the country’s budget; Cowen says it will still be presented to parliament on Dec 7. He reiterated his promise to call elections after the budget is passed. A near-term attack on Cowen’s leadership appears to have fizzled out for the near-term. Irish Times.

Irish corporate tax rate – the country may wind up keeping its 12.5% corporate rate and instead raise revenues by imposing a levy on its banks. Dublin’s overall tax collections would rise, but w/the banking industry bearing the higher rates. Irish Times.

Ireland – as expected, the country will lay out a 4-year austerity program today designed to save EU15B. There remain calls for the government to accelerate the publication of its next budget, which isn’t forecasted to be presented to the Parliament until 12/7. Reuters

Ireland bailout size – this was out during NY trading on Tues – European officials forecast that Ireland will need a rescue package amounting to EU85B (w/EU35B going to its banks and EU50B going to help the government). PM Cowen says the EU85B has been discussed but that nothing has been decided. Bloomberg

Irish Banks – Ireland’s banks may receive a cash injection as soon as this weekend according to a report in the Irish Independent; “urgent action to keep banks afloat will be taken in the next 72 hours”. AIB and Bank of Ireland will effectively become nationalized. “High level talks are underway to pump extra cash into the banks before the weekend”. Irish Independent.

Bank of Ireland – the Irish government is poised to take a majority stake in the lender, which will leave the country w/o any independent large banks; the equity stake will come as a result of the recapitalization BoI will undertake as part of the bailout talks now underway between Dublin and the EU/IMF – FT

Ireland/UK – Britain’s PM Cameron has warned that the Irish crisis risks pushing a “huge” influx of Irish migrants into the UK. Cameron hinted that this fear has prompted his decision to contribute financially to the Irish bailout – London Telegrap

China – Shanghai falls ~2% on worries about bank lending – China left yields on a 1-year bill auction flat W/W, providing some relief to investors who felt the country would aggressively push through higher rates. Meanwhile, the country today said it would increase the supply of agriculture products and sell more reserves of grains and oil to help cool price increases (this is seen as a more desirable technique to cool inflation than tighter monetary policy). However, benchmark lending rates rose to the highest level since Oct and there are reports that Chinese banks have achieved their full lending quota for ’10 already. Meanwhile, there remains a lot of concern that officials will have to ratchet up their inflation-fighting policies (Bloomberg headline today: “China inflation may prove too hot for price controls”) Reuters/WSJ/Bloomberg

Ireland – the latest – there wasn’t a ton of incremental news out overnight. PM Cowen has defied calls to step down, saying he will stay on until Parliament passes a budget, at which time he will dissolve Parliament and call elections (the expectation is that elections will be called sometime in late Jan). Cowen is set to unveil a 4-year austerity program on Wed and will present a budget to Parliament on Dec 7. There is the risk that his budget fails to pass in Dec, a possibility that became very real when two independent members of Parliament on Mon said they would withhold their support. Dublin continues to resist calls to raise its corporate income tax, although will unveil several other measures. Unions are warning the government that it risks unrest w/steep spending cuts and have organized a march on Nov 27. Reuters/FT/WSJ

On the corporate front, we will get auto sales on Wed and same-store-sales on Thurs. ALTR and LSTR both will be publishing mid-Q updates (the first such updates for the CQ4). There are a few more Oct-end earnings (OVTI, ARO, SNPS, AVGO, TOL are among them). Looking towards Washington, the White House will host a summit on Tues 11/30 between Obama and the new GOP leadership (as far as the market is concerned, the big topic will be the fate of the Bush tax cuts).

For the Fed/Treasury, all eyes will be on the auctions Mon-Wed (2s Mon, 5s Tues, and 7s on Wed) given the back-up in yields and the last round of sales (recall the last auctions, on Nov 8-10, were relatively sluggish, esp. the 30yr).

In addition to the auctions, all eyes will be fixed on the FOMC minutes, due out Tues afternoon (2pmET). Given all the recent debate about how much conviction Bernanke & Co have for completing the full $600B QE2, investors will be parsing the language carefully to detect any wavering in resolve.
Away from the Fed, there are a bunch of earnings releases to keep an eye on. The last of the Oct-end tech earnings will come Mon, w/ADI, BRCD, and HPQ esp. in focus. Away from tech, people will be watching MDT Tues morning and DE/TIF on Wed morning.

On the economics front, for the US people will be watching housing (existing homes Tues and housing prices on Wed) and GDP (we will get the first revision of the US Q3 GDP). In Europe, we will get the Nov PMIs on Tues Nov 23 (the US Nov PMIs won’t hit until Wed Dec 1). The next US jobs report will come on Fri Dec 3.