The macroeconomic picture keeps worsening day by day in the euro area and from the start of the fourth quarter the signals are not looking good at all. The focus in the market remains on the euro area and the debt crisis, especially after Papandreou was summoned for talks with leaders in France after the referendum bombshell he dropped on the euro’s fate!

The abysmal macroeconomic data from the euro area did not offset the recovery seen across markets in Europe as the market corrects the heavy selloff seen with the start of the week. The euro is still trading bullishly versus the dollar after slumping to the low of $1.3606 yesterday from the week’s high set on Monday at $1.4169.

We can see the euro trading with gains versus the dollar at $1.3786 now from the opening low of $1.3635 supported by hope that European pressure will contain the referendum crisis that Greek pulled off after the summoned Papandreou for talks in France.

Papandreou said that the referendum on the rescue package will confirm that Greece will remain a member of the euro area, which is an optimistic view to the current situation on hand, where opinion polls reflect the wide rejection for further bailouts and austerity measures, and without the bailout Greece’s chances to stay in the euro turn slim as it will likely be forced into disorderly default and drop out of the euro.

The Prime Minister found the support from the cabinet that voted unanimously to endorse his plan and now he is turning for the euro leaders mainly France and Germany for some tough love!

The leaders summoned him for talks ahead of the G20 summit in Cannes and they are expected to tell him that Greece has no other options but to accept the current situation and respectfully attain the bailout that they went out of their way to provide. Greece also risks losing the IMF backing for the sixth tranche that it did not sign off on yet.

We can see that the market is consumed by the mixed sentiment and heavy volatility and the correctional movements are governing the movement as investors surely did not change their view all a sudden over the referendum just because Papandreou ensured that Greece will remain in the euro!

Investors did not look deeply at the macroeconomic figures which showed the abysmal reality in the euro area. The German labor market unexpectedly contracted in October shedding 10 thousand jobs instead of adding that number according to forecasts.

Unemployment unexpectedly rose to 7.0% from 6.9% assuring that the leading economy in the euro area is also suffering from the broad softening of economic activity in the euro area and the global economy.

The manufacturing sector contracted in October as the final PMI reading was revised slightly higher to 49.1 but still in contraction from September’s 50.3.

The euro area manufacturing also deepened the contraction in October as the index slumped lower to 47.1 from September’s 48.5 assuring the weak start for the fourth quarter.

We can see the debt crisis still offsetting the focus from the recessionary facts that are flowing our way for today and the correction is still ongoing in the market. The focus now turns to the FOMC later in the US session and whether the Feds will signal their likelihood to add another round of QE to support the faltering recovery and also eyes will be on any comments from the meeting in France with Papandreou that investors are anxiously awaiting for any details on.