May 10, 2012
So long 1.3000! EUR/USD had been able to close above the major psychological handle for a couple of times in the past few months, but it looks like the euro didn't have Lady Luck on its side yesterday. The pair tapped its 4-month low at 1.2911 before ending the day at 1.2947, 65 pips below its opening price.
The political drama surrounding Greece continued to weigh down on the shared currency. Yesterday, a couple of German officials hinted that their patience is already running low for the debt-ridden country. It was announced that only 4.2 billion EUR of the 5.2 billion aid package for Greece will be released for now. Whether or not the Greeks will get the remainder of it will be determined by the government's ability to implement the previously-agreed austerity measures.
And as though the news wasn't enough to upset investors, Spanish bond yields spiked above 6% too which only sparked funding concerns for the region's fourth largest economy. Yikes!
It seems that risks of a Grexit and a contagion still remain to be the primary driving factors behind price action. But I wonder if perhaps economic reports from the euro zone will be able to sooth investors to some extent and help the euro pare some of its losses. Well, that is if they come in better-than-expected.
Today's roster of economic data start off with the French industrial production report for March at 6:45 am GMT. It is eyed to come in at -0.4%.
Then at 8:00 am GMT, we'll have the ECB monthly bulletin on tap. The report details the statistics reviewed by the central bank before it made its most recent interest rate decision as well as its economic outlook. If it proves to be more hawkish than expected, we could see the the euro rally. So watch out!
"The only cable I watch is the pound baby."