This is starting to get boring! For the second day in a row, the euro ended virtually unchanged against the dollar as EUR/USD finished 3 pips higher at 1.3244.
You’d think that the euro would get a move on after the PMI reports were released yesterday, but apparently, the markets had other things in mind! Though none of the manufacturing and services PMIs from France, Germany, and the euro zone as a whole matched forecasts, it failed to have a lasting effect on EUR/USD.
Then again, that might’ve been all for the best considering that all of the reports, save for the French manufacturing PMI, fell short of expectations! As a whole, the euro zone’s manufacturing PMI rose from 48.8 to 49.0, which is technically an improvement, but isn’t quite as upbeat as the 49.4 figure that many were expecting to see. Meanwhile, its services PMI slipped from 50.4 to 49.4 instead of rising to 50.7. Bummer! No wonder I heard a lot of fellow analysts reviving talks of recession!
As if that weren’t enough bad news, Fitch also announced yesterday that it decided to downgrade Greece’s sovereign debt rating from CCC to C, saying that a Greek default is “highly likely in the near term.”
The only silver lining was the industrial new orders report, which revealed a 1.9% surge in new purchase orders in December to beat forecasts which called for a lame 0.6% rise. This kind of growth is exactly what you want to see after the previous month’s 1.1% slide.
Today, we only have the German IFO business climate report on tap, and survey says the index will rise from 108.3 to 108.7. Look for the euro to strengthen if results exceed expectations, as this is one of the most important German reports. Good luck, and may the pips be with you!