November 9, 2012
Ka-pow! Bears delivered a multi-punch combo to the euro in yesterday's trading. EUR/USD finished the day lower at 1.2746 after opening at 1.2770. Meanwhile, EUR/JPY ended the day with an 82-pip loss at 101.30.
There were a few factors that made the euro vulnerable to the sellers' advances.
For one, markets are worried about China. Not only do we have a lineup of economic reports from the Asian country, but the government is also Going through major political reform. The Communist Party is still the ruling party in China, however, markets are on their toes for policies on growth and the Yuan that will be introduced by the new leaders.
Greece also added to the euro's problems. Riots have broken put in the debt-stricken country after the government agreed to implement more austerity measures and gave investors more reason to stay out of the euro.
Of course, there was also the ECB rate decision. ECB President Mario Draghi didn't announce any rate hike. In fact, he sounded pretty comfortable with the bank's current monetary policy, saying that inflation would fall below the ECB's target of 2%. However, he was very pessimistic about the region's growth in the coming year.
The German trade balance report didn't bode well for the euro either, as it only affirmed Draghi's concerns about growth. September's trade surplus for September was lower at 17.0 billion EUR than August's reading of 18.1 billion EUR and missed the 17.2 billion EUR forecast.
With all the pessimism surrounding Europe's growth, I wouldn't be surprised to see the euro trade lower should the French industrial production report come in lower than the -0.9% forecast later at 8:45 am. So make sure you don't miss it, ayt?
"The only cable I watch is the pound baby."