Despite S&P’s credit rating downgrade of Spain, the euro was still able to post some spectacular gains yesterday. After it had sold-off heavily during the Asian trading session, the shared currency staged a strong rally to close the day 28 pips higher at 1.2928.
Apparently, the euro was able to recover due to a very successful Italian bond auction. The lower credit rating also gave rise to speculation that Spain would be forced to avail of a bailout soon.
The economic front was pretty much dead yesterday as only a few tier 3 reports were released. There was the final version of Germany’s CPI and the French CPI. Both didn’t have a meaningful impact on price action.
The economic calendar will be uneventful again today as only the Industrial Production report is scheduled to publish. It’s expected to show a 0.4% decrease, opposite the 0.5% gain seen the previous month. Still, with the week coming to a close, we could see a bit of volatility from the euro as traders close shop before they go off for the weekend.