The euro pulled off an R. Kelly move against the dollar last Friday as it bounced-bounced, bounced-bounced off support at the 1.4100 handle. It was able to pare some of its losses when it ended the week 159 pips above the day open at 1.4122.
Although we had a few reports from the euro zone, I think a large part of the euro’s win was because of concerns over a U.S. debt downgrade.
It was reported that the French trade deficit for June was smaller at 5.6 billion EUR than the 6.3 billion EUR forecast. We also saw that the Italian economy grew by 0.3% in Q2 2011 and beat the consensus which was for a 0.2% in the GDP report.
On the other hand, the German industrial production report for June showed a 1.1% decline and disappointed the market forecast which was for a 0.1% uptick.
Now that the fears of investors have already been confirmed when S&P downgraded U.S. debt, will we see the euro rally up the charts?
Maybe. However, we have to keep in mind that problems in Italy and Spain are still there. Just be on your toes for any changes in market sentiment, ayt?
Also keep tabs on the Sentix investor confidence report for August due at 8:30 am GMT. Analysts are anticipating the report to come in at 3.6. Watch out for the actual figure as it may give investors one more reason to buy (or sell) the euro!