Highlighted risks to sentiment this week will fall on the Bank of Japan meeting on monetary policy (Tuesday), new information regarding the latest roadblock to Greece’s crucial austerity package, the massive storm on course to hit the North-Eastern coast of the United States, and more earning’s reports ahead of October U.S. non-farm payrolls data – all of which investors will be watching closely for directional cues.
In the U.S., twelve states and districts have declared states of emergency, including densely populated metropolitan areas such as New York City, Philadelphia and Washington, D.C., for what is being called a “Frankenstorm.” According to experts at the National Weather Service, Hurricane Sandy is expected to strengthen above a category 1 hurricane by the time it begins to make landfall later today. The storm system has been named “Frankenstorm” by some meteorologists because of Sandy’s potential to collide with a cold front moving eastward from the Midwest. The USD and JPY could enjoy some safe haven flows as the trading week gets underway, given the perceived safety of the U.S. dollar and the Japanese yen.
Regarding the situation on near-bankrupt Greece, the country's finance minister said on Sunday that foreign lenders will not make any further changes to labor laws, which threatens the nations receipt of the next tranche of aid before it runs out of cash in mid-November.
For now though, EUR/USD has gotten off to a quiet start. According to the FXstreet.com Independent Analysis Team, “the technical picture still looks negative,” and “Accelerations through the 1.2880 area could led the pair toward 1.2850 en route to 1.2836 where the 200-day SMA should offer strong support.”