Fundamental market overview

EUR

Greek Prime Minister George Papandreou decided to put the latest bailout package for the nation to a public referendum late Monday. "The Greek prime minister has taken this decision without talking it through with his European colleagues," said Jean-Claude Juncker, who chairs meetings of euro zone finance ministers.

USD

U.S. manufacturing index declined to 50.8 in October, from 51.6 in September, the Institute for Supply Management said on Tuesday, as sales overseas declined on weaker consumer spending. Still, read-ing above 50.0 indicates industry expansion.

GBP

U.K. house prices rose for a second consecutive month in October, said property researcher Hometrack Ltd. The average price of a home increased 0.4% from September to ??165,650 and was up 0.8% from a previous year.

CHF

Swiss stocks dropped on Tuesday after Greek prime minister George Papandreou decided to put the latest bailout package for the nation to a public referendum. The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, lost 2.49%, or 142.70 points, to 5,588.57. The broader Swiss Performance Index dropped 2.58%, or 134.23 points, to 5,077.68.

JPY

Japanese stocks plunged on Tuesday after Greek Prime Minister called for a referendum on a new rescue package agreed at a Euro-pean Union summit last week . The Nikkei 225 lost 1.70%, or 152.87 points, to 8,835.52, while the broader Topix decreased 0.96%, or 7.37 points, to 764.06.

Market expectations

EUR/USD

The currency pair has gone through support at 1.3655/52 and is now headed towards a subsequent level located at 1.3566. The long-term target for the price is situated at 1.3145, while rallies will be capped by resistances at 1.3850 and 1.3930.

EUR/JPY

Temporary weakness of EUR/JPY is expected to fade, triggering a surge which may extend up to 108.13/109.25. Nevertheless, the longer term outlook is negative, with an estimate of 104.76 being reached.

GBP/USD

Bearish momentum of the cable is anticipated to gain strength and drag the price towards lower levels, such as 1.5632 and 1.5272. Any attempts of advancement are likely to be hampered by a tough resistance at 1.6000/40.

USD/JPY

Currently USD/JPY is directionless, at it is being capped by 79.83 and 80.57 from above. A breach of the latter level would imply continuation of the uptrend. From below the pair is supported by lines located at 78.09, 77.86 and 77.50.

USD/CHF

USD/CHF is struggling at a resistance at 0.8936, which is expected to send the price down to 0.8763, where in turn the recovery is likely to commence. Resistances are situated at 0.9082, 0.9184 and 0.9317.

Most important events of the day

Europe

Greek Cabinet has agreed to back Papandreous plan of a referendum on bailout package. PM's main argument that the consent of Greek people shall be reached.

Greek cabinet backs George Papandreou's referendum plan
Greece's cabinet has given unanimous backing to a controversial plan by PM George Papandreou to hold a referendum on a EU debt rescue package.

USA

MF Global filed for bankruptcy protection on October 31, becoming the first US victim of European debt crisis.

Broker MF Global misused customer cash, says regulator
Troubled broker MF Global did not separate its customers' money from its own funds, according to its regulator. By law, brokers have to keep their customers' money separate from other customers' money and from the company's own funds.

Asia & Pacific

Australia has decreased its benchmark rate to 4.5% from 4.75% to curb inflation level.

Aussie, N.Z. Dollars Maintain Drop Versus Yen on Greek Concern
The Australian and New Zealand dollars maintained declines from yesterday versus the yen as a referendum pledge by Greece's prime minister drove commodity prices and Asian stocks lower.