Despite rising European bond yields, the euro remained steady in yesterday’s trading action and actually chalked up another victory versus the dollar. For the first time in nearly 7 weeks, EUR/USD posted its third consecutive gain, rising 38 pips above its opening price to finish at 1.2620.
The euro’s success yesterday was somewhat surprising, as Spanish bond yields rose above 7% as Moody’s recently downgraded Spanish debt to just above junk status. Despite the concerns about Spanish debt, it seems traders are unwilling to put their money on the line ahead of the Greek election, and that’s why the euro was able to stay afloat yesterday.
In other news, the CPI reports came in just as expected, with headline figures printing at 1.6% while core numbers came in at 2.4%. This indicates that for the most part, inflation isn’t out of hand, which could give the ECB the room it needs for a rate cut sometime later this year.
Seeing as how the Greek election is just around the corner, I don’t expect us to see any strong moves in today’s trading. Just watch out for ECB head honcho Mario Draghi’s speech at 6:50 am GMT, as he’ll be speaking at an economic conference. You never know what he might say, so just be careful when he begins his speech!