Another down day for the euro, as risk aversion continued to dominate the markets. EUR/USD dropped 50 pips to finish at 1.4208. Meanwhile, EUR/CHF made yet another all-time low, falling nearly 200 pips to close at 1.0876! Mama mia! What’s going on?!
Yields on Italian and Spanish debt have continued to rise even after Greece received another bailout, indicating that investors are still wary of the European situation. I fear that this could be a recurring theme over next few weeks, and don’t be surprised if we start hearing that another country (ahem, Spain, ahem) may require a bailout as well.
The euro also took a hit thanks to poor PPI figures, which came in flat after expectations were for a small increase of 0.1%. Remember, this is a leading indicator of inflation and if prices aren’t rising, it gives the ECB less reason for another rate hike.
Looking at our fabulous economic calendar, I see that we’ve got euro zone wide retail sales data coming in at 0.5%. Word through the forex grapevine is that sales rose a decent 0.5% this past June, which would be a nice turnaround from the 1.1% drop we saw the month before. Should the report come in better-than-expected, it could give the euro enough juice to stay afloat in today’s trading sessions.