Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
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The EUR extended its streak to 3 against the dollar and yen last Friday. The EURUSD soared to 1.3762 from 1.3680. The EURJPY, in a similar fashion, closed higher at 124.50 from 123.87.

The euro zone’s industrial production came in a lot better than anticipated, gaining by 1.7% in January. The consensus was only 0.8%. The previous month’s tally was also revised up to 0.6% from -1.7%. The euro, as a result, got a big boost right when the positive results were posted.

This week will start with the publication of euro zone’s employment change during the last quarter of last year. The third quarter saw a 0.5% decline in job hiring which is a loss of 2.1% on a year on year basis. Overall output growth in the 3Q within the EZ was almost flat at 0.1%. With the economy unable to post much gain, employment hiring could very well be stagnant as well.

Tomorrow, Germany’s and euro zone’s Zew economic sentiment in March together with the euro zone’s February CPI figures will be on tap. Sentiment in Germany is projected to fall to 43.5 this month from 45.1. Sentiment in the euro zone is anticipated to weaken as well to 40.1 to 40.2. Remember, however, that one of the top officials in the EU announced that Greece’s debt problems are already ‘over.’ Will this news reflect on tomorrow’s reports?

On a separate account, the euro zone’s inflation figures will be on tap also tomorrow. Y/Y headline CPI is projected to have remained the same at 0.9% in February. The core version of the account, on the other hand, likely softened a bit to 0.8% from 0.9%.

On Thursday, the euro zone’s current account and trade balance in January will be due. The economy’s current account likely expanded to €2.9 billion from €1.9 billion. The trade balance, on the other hand, is expected to have narrowed to €5.1 billion from €7.0 billion. Since the trade balance is seen to have declined, the increase in the economy’s current account could be attributed to some gains in its income payments and/or unilateral transfers.

Finally, Germany’s February PPI will be on deck this coming Friday. Producer prices in Germany are seen to have softened to 0.1% from 0.8%. The result of this account, however, could have a minimal impact on the euro’s short term valuation since the euro zone’s CPI will be already be released earlier.

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The euro finally ended its three-day winning streak against the dollar yesterday. The EURUSD found itself drowning way below the 1.3700 handle by the end of the day, more than 120 pips lower from its week open price.

The euro sell-off was primarily caused by the rumor that went around that Germany and France have no plans of bailing out Greece. According to them, Greece’s €4.8 billion in budget cuts is sufficient to get them out of their own debt mess. And once again, this was taken as sign to sell the euro, causing the EURUSD to completely erase its gains from Friday. Like I said yesterday, unless the euro zone debt drama blows over, the euro’s gains will remain capped!

On the docket today, at 10:00 am GMT, watch out for the German Zew economic sentiment survey. The survey, which is designed to predict the direction of Germany’s economy for the next six months, is expected to print a reading of 43.5 for this month, slightly lower from the reading seen last February. If forecast holds, it could spell trouble for the euro, as it would mark the sixth consecutive month of decline.

Euro zone’s February consumer price index will also be released at the same time. The consensus is that the average level of prices of consumer goods and services rose by 0.9% year-on-year. Since the ECB’s inflation target is set at 2%, the possibility of an early rate hike remains low.

That’s about it for the euro today… I’d keep a eyes peeled for developments on Greece’s debt, as it’s garnering quite a bit of attention again…

186

It was turn back the clock Tuesday for the euro, as it reversed most of its losses from the previous day. The EURUSD closed 90 pips higher to end the day at 1.3766. Will the pair finally break past the 1.3800 handle?

Yesterday, the German ZEW economic sentiment report printed a better than expected reading of 44.5. This beat consensus of a score of 43.5 and but still marked the 6th consecutive month that the index fell. Remember, Germany is the largest economy in the euro zone and has put the euro zone on its shoulders throughout this financial meltdown. If the economic outlook in Germany is deteriorating, this could spell a world of trouble for the euro zone.

Meanwhile, we didn’t get any surprises from the consumer price index, which showed that prices rose by 0.9% year-on-year. This was right in line with forecasts. As I said yesterday, as long as inflation isn’t near the ECB’s inflation target of 2%, the prospects of a rate hike are pretty dim.

Despite the mixed data, what got the euro moving was good news coming out of Greece. That’s right, you read it correctly – good news from Greece! The debt-stricken nation avoided a credit rating downgrade from Standard and Poor’s, which let the Greeks release a sigh of release. You see, this indicates that the credit agency has confidence that Greece will be able to reduce their debt. Coupling this with increased risk appetite during the US session and boom – we got a euro rally!

No high impact data on deck today, so we may see more range like trading for euro pairs. However, if the EURUSD manages to push past its one month highs, it could set the ball rolling for a euro rally. Be careful trading out there my forex friends!

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Newsflash: The Greek debt drama is far from over! It seems like Germany is having second thoughts about providing aid to the heavily indebted fellow euro zone nation, causing the EUR to weaken against the USD and JPY.

Being the largest and richest nation in the euro zone, Germany is expected to provide most of the funds needed to help Greece. Yesterday, German President Angela Merkel said that governments should think carefully before supplying funds for the aid plan. Aside from that, she also proposed stricter rules that would lead to the expulsion of euro zone nations failing to fulfill the tenets of the Maastricht Treaty, which created the euro zone in the first place. Uh oh, Greece won’t probably receive financial backing from big brother Germany anytime soon…

On the economic front, the euro zone is bound to release its current account balance at 9:00 am GMT today. This could show that the region’s current account surplus widened from 1.9 billion EUR to 2.9 billion EUR in February. By 10:00 am GMT, the euro zone will release its trade balance, which could reveal that the surplus narrowed from 7.0 billion EUR to 5.1 billion EUR in January. Weaker than expected numbers could force the EUR to fall further.

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The EUR slipped again yesterday, losing by more than a hundred pips vis-à-vis the greenback and the yen. The fiber (EURUSD) fell and settled at 1.3608 from 1.3738. Similarly, the EURJPY also declined to 122.99 from 124.06.

Euro zone’s current account balance in January unexpectedly fell to -€8.1 billion (vs. €2.9billion consensus) from €2.3 billion. Much of the loss in this account could be attributed to the decline in the euro zone’s trade balance which slid from €4.1 billion to -€8.9 billion. These weak trade figures from the euro zone gave the EUR yet another blow.

Today (7:00 am GMT), Germany’s producer price index (PPI) will be released. Input prices in February are seen to have gained by a modest 0.1% on top of December’s 0.8% rise. The result, however, could just have a muted impact on the EUR since both Germany’s and the euro zone’s CPIs were already issued earlier.

At 7:45 am GMT today, ECB President Jean-Claude Trichet is set to speak regarding the bank’s crisis management framework at a conference organized by the Internal Market and Services Directorate of the European Commission. Traders will most likely tune in to his speech to find out how the ECB will handle the euro zone’s debt situation. A lack of a concrete plan could further weigh on the EUR.

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The euro turned out to be the biggest loser last week, giving up a large amount of ground against both the dollar and the yen. By the end of the week, the EURUSD found itself drowning below the 1.3500 handle while the EURJPY fell to 122.30.

Can you guess what caused the down move last Friday? Yep, it’s all about Greece again. Currency traders found themselves exchanging their euros for dollars when uncertainty regarding Greece’s bailout mounted. It seems that it is still unclear whether other countries in the euro zone would provide some form of financial aid to Greece.

On the docket today, at 3:30 pm GMT, is a speech by by ECB president Jean-Clead Trichet. With the ongoing Greek debt soap opera, the talk later could pose significant event risk. I’d keep an ear out during that time, just in case Trichet mentions something about Greece.

Looking further ahead this week, there are a bunch of reports that could catch the attention of traders.

On Wednesday, at 9:00 am GMT, the German Ifo Business Climate is due. The consensus is a reading of 95.8 for this month, slightly higher than the 95.2 reading seen last February. The survey tries to determine whether businesses feel positive or negative about euro zone’s economy for the next six months. A rising reading indicates optimism among businesses, and could lead to increased economic activity in the future.

At the same time, euro zone will release its March purchasing managers’ index for both the manufacturing and services industry. The manufacturing PMI is expected to print a reading of 54.2, while the services PMI is predicted to show a reading of 52.0. If the actual number comes in higher, the euro could find some buyers.

Lastly, at 10:00 am GMT, euro zone’s industrial new orders report for January will come out. The report is typically used by traders as a leading indicator of production, because rising orders leads to increased activity of manufacturers. The forecast is for an increase of 2.1%, up from the 0.8% rise in December.

With the amount of economic reports coming out this week, and the uncertainty surrounding Greece, the euro could be in for a wild ride. We all know how sentiment can shift on a dime so stay on your toes!

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It looked like the EUR was headed for another day of losses, before it go it’s second win late in the US session to actually come out ahead. After trading as low as 1.3461, the EURUSD closed the day at 1.3559, a recovery of almost 100 pips!!

The euro zone received quite a shock yesterday, when Greece threatened to leave the Euro zone if nobody wanted to help them. “Not so fast, it ain’t that easy,” said ECB head honcho Jean Claude Trichet. And so, the Greek saga continues. As I’ve said before, Greece wants the help of its European brothers, but they are reluctant to extending a hand, saying that Greece doesn’t need their help.

First, they threaten to go to the IMF for help. Now they are saying that they will leave the (EZ) party altogether. Looks like the Greeks are desperate for attention. With no concrete plans yet to emerge, lets see how this plays out by the end of the week, when the EU meetings come to a close.

Once again, no high impact hard core data expected from the euro zone today. Tomorrow should be much more interesting, as German Ifo business climate index is due at 10:00 am GMT. The index measures how optimistic of pessimistic businesses feel about the state of the economy over the next 6 months. It is expected to print a reading of 95.8, just a notch higher than February’s score of 95.2.

Also due tomorrow are the euro zone manufacturing and services PMI reports, as well as the German and French versions. These reports are expected to show slight increases in their readings. If they come in much higher than expected, it may give the euro the boost it needs to overcome all the uncertainty over its debt problems.

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After pulling up and gasping for air, the EUR pairs resumed their dive immediately. The EURUSD and EURJPY seem to have found support around 1.3475 and 121.75 respectively but would these levels hold?

And the Greek debt saga continues! Recent developments show that France and Germany both support the IMF’s involvement in providing aid for debt-ridden Greece. Well, Germany has given the IMF the thumbs up sign right off the bat but France, which has staunchly opposed reliance on the IMF, just changed its mind yesterday. With the go signal from euro zone’s largest economies, would the IMF along with the EU officials be able to get this bailout show on the road or would there be more roadblocks along the way? Although the EUR seemed to enjoy these developments, its gains were tempered as more concrete plans are yet to be unveiled.

Yesterday’s economic docket was nearly empty, save for the release of Belgium’s NBB business climate report. The report printed better than expected results, with the index climbing from -7.0 to -3.6 in March. However, since the index is still in the negative territory, it indicates that economic conditions are worsening but at a slower pace this time.

Today is PMI day for the euro zone! Are you ready? Brace yourselves for the release of France and Germany’s services and manufacturing PMIs starting 8:00 am GMT. In France, manufacturing conditions are expected to hold steady at 54.9 while the services industry is gunning for an improvement from 54.6 to 54.9. In Germany, manufacturing is projected to worsen from 57.2 to 56.9 while services could see an uptick from 51.9 to 52.2. Overall, euro zone’s manufacturing industry could post a slight contraction to 54.1 while its services sector could show an expansion from 51.8 to 52.0.

Also due today is Germany’s business climate report, which could reveal that business conditions improved from 95.2 to 95.8 in March. Watch out for the actual figure at 9:00 am GMT.

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The EUR found itself flat on its face against the greenback yesterday. The EURUSD slid and settled at 1.3312 from 1.3499. The pair could be heading down all the way to 1.3000 since it already broke the significant 1.3400 support. Stay tuned!

Euro zone’s, France’s and Germany’s March PMI figures were all released yesterday. The French manufacturing PMI rose to 56.3 from 54.9 while its services PMI slipped to 53.0 from 54.6. Germany’s numbers, on the other hand, were all upbeat with its manufacturing index reaching 59.6 from 57.2 and its services index also logging in a score of 54.7 from 51.9. The figures of the broader euro zone likewise registered some strong scores with its manufacturing PMI rising to 56.3 from 54.2 and its services PMI tapping 53.7 from 51.8. These numbers indicate that business activity in the most part of the euro zone is getting better.

On a separate account, Germany’s Ifo business climate index for the month of March also showed a promising result, rising to 98.1 from 95.2.

The news that weighed on more on the EUR, however, is Germany’s insistence that Greece, which is hampered by soaring debt, seek help from the IMF instead. Simply, Germany wants Greece to be “punished” for mismanaging their fiscal policies.

Later during the day, euro zone’s industrial new orders in January were also issued. Orders for that month unexpectedly declined by 2.0% after gaining by 0.8% in December. This drop in the account added some more selling pressure on the EUR.

Today (7:00 am GMT), the result of Germany’s GfK consumer confidence survey in April will be accounted for. The index is seen to slightly drop to 3.1 from 3.2.

At 8:00 am GMT, ECB President Jean-Claude Trichet will present the ECB’s annual report at the European Parliament, in Brussels. Volatility could be in high gear during this time as he may again spill some comments regarding Greece’s debt situation. Be on the lookout!

193

The euro struggled to stay afloat in yesterday’s trading session. The EURUSD, after hitting an intraday high 1.3386, found itself dropping again to close the US trading session at 1.3286. For the entire week, the pair has lost a grand total 244 pips. All this euro zone debt drama is really weighing down heavily on the EURUSD.

In addition to Greece’s financial problems, economic data that came out yesterday wasn’t quite up to par.

For one, a report on French consumer spending yesterday revealed that spending in February fell 1.2%, opposite the 0.4% rise initially expected. This was also on top of the 2.5% drop seen the month before. Retail sales in Italy too followed suit, ticking down by 0.5%. Finally, euro zone’s M3 money supply – a report that measures the monthly change in the amount of domestic currency in circulation – fell by 0.4%, worse than the 0.1% decline consensus.

The only “good” news yesterday was that Germany’s Gfk consumer climate survey for March remained at 3.2. Economists predicted that it would fall to 3.1. The Gfk consumer climate survey measures how confident consumers are about their present and future finances. A rising reading means consumers are getting more optimistic, while a falling reading indicates otherwise.

For today, keep an ear out for the ongoing European Summit. European Central Bank President Jean-Claude Trichet, together with the EU heads of states, are set to discuss economic conditions in EU as well as a possible solution for Greece’s debt problems. If they end up in disagreement again, we could see the EURUSD tumble down again…

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After breaking through key support in the middle of last week, the EURUSD was able to recuperate much of its losses last Friday as traders reacted favorably to news coming out of the EU summit. After hitting a low of 1.3268, the EURUSD rose back up to end the week at 1.3408.

Greek leaders jumped for joy when European leaders, most notably those from Germany and France, agreed on a bailout package which would include some help from the IMF. This gave support for the euro, which had been on a roller coaster ride the past couple of weeks as the markets weren’t quite sure what would happen.

Still, some feel that the aid provided may not be enough. For one, word on the European grapevine is that only € 20 billion will be provided, while €75 billion is needed. Secondly, there are some uncertainties as to what exactly the IMF’s role will be in this assistance package. I’m interested to see whether this could be the start of more unity in the European Union… or if the bickering will start again if more concerns pop up down the line.

Today, euro zone consumer price index figures are due, with reports expected to show an increase in prices of 0.3% in the past month. A better than expected figure would be welcome, its impact on the market will probably be muted, as investors and traders are still focused on the bailout package.

On Wednesday, we’ve got some unemployment data coming out. Euro zone unemployment is expected to have risen from 9.9% to 10.0%. If we see a worse than expected figure, could it send the euro tumbling back to its yearly lows?

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The EUR was still on recovery mode yesterday as it climbed against the USD and JPY. Aside from the slow return of investors’ confidence in the EUR, strong economic reports were also able to push the EURUSD towards the 1.3500 handle and keep the EURJPY above the 124.00 mark.

Germany’s CPI printed a nice 0.5% increase, outpacing the forecast of a 0.3% uptick. This pushed their annualized CPI to 1.1% in March. Oil prices, which rose by 66% from the previous year, led the increase. However, analysts say that inflation is expected to remain subdued during the year.

Meanwhile, consumer confidence in the euro zone held steady in February. Now that’s quite a feat, considering how the Greek debt crisis could’ve caused consumers’ financial outlook to worsen. What kept consumers optimistic was the recent surge in euro zone’s exports, spurred by the decline of the EUR in the past few months. Coincidentally, this depreciation was mostly a result of Greece’s debt concerns. Funny how it all worked out for euro zone…

No economic reports are due from the euro zone today, which could make for relatively calm movement among the EUR pairs. Keep an eye out for the release of the US consumer confidence report, which is slated to print an improvement. Better than expected results could boost risk appetite and allow the EUR to go for more gains.

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The EUR tumbled vis-à-vis the greenback after reaching a high of 1.3538 late in the Asian session. The EURUSD pair then slid to close the day lower at 1.3414 from 1.3480.

The euro zone did not publish any major economic reports yesterday. The EUR, however, weakened when less than half of the Greek bonds that were auctioned were sold. Remember that Greece needs to raise €53 billion, €20 billion of which will be used to pay their dues for the month of April and May. If Greece continues to struggle in raising some funds from the market then they will have no choice but to run to the IMF and to the other EU-member nations for aid.

Germany’s unemployment change in March will be coming off the press later at 7:55 am GMT. German firms are seen to have slashed another 10,000 jobs on top of the 7,000 during the previous month. Still, Germany’s jobless rate is expected to be steady at 8.2%. The overall jobless rate in the euro zone, however, is projected to have worsened to 10.0% from 9.9%. An uptick in unemployment could place a lot of pressure in spending and, therefore, would be detrimental to the economy and the EUR.

On a separate news, euro zone’s flash year-over-year CPI estimate in March will also be accounted for. The general prices in the euro zone likely reached 1.1% from 0.9%. A gain in the CPI is usually bullish for the EUR. However, given Greece’s debt situation, it is unlikely for the ECB to raise its rates in the in the near future as doing so would place Greece in a much deeper hole.

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Thanks to the combination of good euro zone data and ugly US labor figures, the EURUSD was able to stage a magnificent rally in yesterday’s trading session. The pair closed out the US session at 1.3506, almost 100 pips higher from its Asian session opening price.

Germany’s unemployment change released yesterday revealed that the number of unemployed people in February was reduced by 31,000 from the month before. This was a welcome surprise for the euro bulls because the forecast was for an increase of 10,000. Speaking of unemployment, euro zone’s labor market report also showed yesterday that joblessness in the 16-nation zone went up to 10.0% in February from 9.9% the month before just as expected.

In other news, euro zone’s flash consumer price index estimate for March was an increase of 1.5%, better than the 1.1% rise initially expected. Remember, since rising inflation usually leads the European Central Bank to raise interest rates in the future, the unexpected jump gave the bulls another reason to buy up the euro.

For today, the only important data to watch out from euro zone is Germany’s retail sales report at 6:00 am GMT. The expectation is that there was no change in retail sales in February from the month before. If the actual figure comes in positive, we could see the euro find some buyers once again today.

By the way, most of euro zone’s banks will be closed tomorrow in celebration of Good Friday so we could see some volatility towards the end of the European session later as traders close shop for the long weekend.

198

Woooooo! It was a pretty quiet trading day, but once the US NFP report released favorable figures, the euro took a hit as traders bought up the dollar. The EURUSD ended the day below the 1.3500 handle.

With the European markets still closed today, it is possible that we may see sentiment carry over from last Friday. With the thin liquidity, we could see some exaggerated moves, so be careful out there!

The big news to watch out for this week will be the ECB rate decision on Thursday. As usual, the ECB isn’t expected to raise rates, but that doesn’t mean we can take some time off and have a pan con chocolate at your favorite boulangerie.

Watch out for comments made by ECB President Jean Claude Trichet and other ECB members, more specifically anything about Greece. Remember, Greece isn’t out of the woods yet – they still need to raise some more funds before May and things aren’t looking too good right now. If Trichet shows some concern about Greece’s (and the euro zone as whole) fiscal status, we may see euro bearishness from recent months kick off the new quarter.

In other news, German factory orders and industrial production figures will be released on Wednesday and Thursday respectively. Factory orders are expected to have dipped by 0.9% in February, while industrial production is seen to have maintained growth of 0.7% in the same month.

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Ouch! The euro took a few hits from the greenback and the yen yesterday after the Greek debt drama made a reprise. Argh, I thought these conflicts were over and done with already!

The EURUSD fell to a low of 1.3460 while the EURJPY tumbled to the 127.00 handle as Germany seemed to emerge as the antagonist in the Greek debt tragedy. It turns out that the largest nation in the euro zone is demanding that higher interest rates be charged on loans to Greece. To help the heavily indebted nation, most euro zone countries have been willing to lend at 4% to 4.5%, which is the same rate that Portugal and Ireland pay on their loans. However, big brother Germany declared that Greece should pay 6% to 6.5% on borrowed funds since it has a higher risk of default. Greek Deputy Prime Minister Pangalos retorted, saying that Germany’s unwillingness to help is a result of racial issues. Why can’t they all just get along?!

The euro was unable to draw support from any economic reports yesterday since, well, its economic calendar was empty! Today the Sentix investor confidence report is due at 4:30 am GMT. This report could show that the reading for April climbed from -7.5 to -5.9, indicating that investors’ pessimism is slowly fading. Although a better than expected figure could lift the euro, conflicts surrounding the Greek aid plan could continue to limit the euro’s gains. Also keep an eye out for the release of the US FOMC minutes at 2:00 pm GMT since this could determine the direction of the EURUSD.

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The euro woke up on the wrong side of the bed again yesterday as it slid against the greenback and the yen. The EURUSD fell to and settled at 1.3406 from 1.3480. The EURJPY also declined to 125.63 from 127.14.

The euro zone’s Sentix investor confidence index for the month of April came in better than expected at 2.5 versus the -5.9 forecast. Despite this, the euro continued to fall because of some reports from Market News International that Greece may not look for the IMF’s help after all. Greek Finance Minister George Papaconstantinou, however, replied that they have not attempted to revise their rescue plan to keep out the IMF. Whether or not this is true, one thing is for sure. That is, there is still a lot of confusion surrounding Greece’s debt issue.

Germany’s February factory orders will be released later at 10:00 GMT. Orders are seen to have slipped by 0.8% in February after gaining 4.3% during the previous month. A drop here could give the euro another blow.

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The unexpected revision on euro zone’s GDP gave the chance for the euro bears to shine yesterday. The EURUSD closed the day at 1.3344, more than 60 pips lower from its opening price during the Asian trading session.

The GDP report yesterday showed that euro zone actually failed to grow during the final quarter of 2009, rather than growing by 0.1%. For the entire 2009, euro zone’s economy shrunk 2.2%.

It wasn’t all bad news though. Germany’s factory orders released a couple of hours later managed to beat expectations. It showed that orders in February was flat, instead of falling by 0.8% like initially expected. January’s reading was also revised up to 5.1% from 4.3%.

Euro zone’s economic cupboard today is overflowing with data.

First up, at 9:00 am GMT, euro zone’s retail report will come out. The expectation is that retail sales were flat in February, a slight improvement from the 0.3% decline seen the month before. Following shortly at 10:00 am GMT is the German industrial production report. The forecast is a rise of 0.7% in February,up from the 0.6% increase seen in January. The positive expectations on the reports could help the euro regain some of its losses.

Lastly, at 11:45 am GMT, the ECB will announce its decision on interest rates. It is widely expected that interest rates will be kept at 1.00% so traders will be more focused on the accompanying statement. Watch out for any Greek debt talk, as it has been a very hot topic as of late. If ECB President Jean-Claude Trichet starts talking down the problem again, we could see the euro find some buying support.

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It looked like the EURUSD was going to test former lows, but some positive comments from the ECB helped the pair avoid bigger losses. After diving below the 1.3300 handle, the EURUSD came back up for air, closing at 1.3349.

In yesterday’s European Central Bank press conference, President Jean Claude Trichet focused on Greece’s debt issues. As excepted, Trichet tried to talk down the problem, expressing confidence that the Greece will be able to handle its budget issues and will be able to avoid a credit default. Quite frankly, his comments aren’t surprising at all – he is after all, the president of the ECB and would naturally do all he can to calm down fears that Greece’s debt issues may spill over onto other euro zone countries.

Meanwhile, the ECB kept rates steady at 1.0%. As long as we keep hearing debt news prop up from the likes of Greece, Portugal and Spain, this will continue to hinder the ECB’s efforts of unwinding all its stimulus packages.

In other news, euro zone retail sales and German industrial production figures came in worse than expected, which led to the euro’s demise early in the European session. Retail sales fell by 0.6% in February, after it was expected to have remained steady. German industrial production, on the other hand, showed no growth during the same month, after consensus was for an increase of 0.7%. Boy, imagine if Trichet didn’t deliver those upbeat comments – we could have seen the EURUSD hit a new yearly low!

We may see more range bound trading today, as we’ve only got French industrial production figures on deck at 6:45 am GMT. Industrial production is seen to have risen by 0.2% in February, but seeing as how the German account came in worse than projected, could we expect the same in the French version?

Do watch out at the end of the European session, as Trichet will be speaking once again. He will be talking about economic crises and global governance, but you never know, he may just drop some comments about Greece once again.

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Finally! The Greek bailout plan seems to be underway now that EU officials are seeing eye-to-eye in terms of securing a joint IMF and EU aid package. Ironically, it was Fitch’s downgrade of Greece’s credit rating that elicited this united response from the EU.

Despite Greece’s sovereign debt downgrade from BBB+ to BBB-, the euro soared against the greenback and closed just 6 pips shy of the 1.3500 handle last week. Recall that Greece has been thinking of securing funds on its own but this credit downgrade lessens the chances that they’ll be able to do so. Now that their risk of default is higher, Greece will have a tougher time selling their bonds and will most likely avail of the aid package from the IMF and EU. Over the weekend, EU finance ministers pledged 30 billion EUR in aid for the heavily indebted Greece. Today, another meeting will be held to iron out the other details of the bailout plan.

Economic data from the euro zone was mixed last Friday as Germany printed stronger than expected trade balance figures while France’s industrial production reading missed the consensus. Germany’s trade surplus grew from 8.7 billion EUR to 12.1 billion EUR in February, spurred by a sharp rise in exports. Meanwhile, French industrial production stayed flat in February after rising by 1.1% in the previous month.

Now let’s take a look at the economic reports on deck for this week… Today, only the Italian industrial production figure is due. Although this report is slated to have a minimal effect on the euro’s price action, a stronger than expected figure could provide support for the euro.

Tomorrow, a few low-key inflation reports are due starting 6:00 am GMT. The German final CPI reading for March is expected to be 0.5% while their wholesale price index for the same month could post a 0.2% uptick. French CPI, which is due 6:45 am GMT, is also projected to be at 0.5% for March. These could set the stage for the overall euro zone CPI due Friday.

Euro zone’s industrial production figure is set for release on Wednesday 9:00 am GMT. The report could post a 0.3% increase for the month of February after seeing a larger 1.7% growth in January.

Trade balance figures from Italy and the euro zone are due Thursday this week. Italy’s trade deficit is estimated to narrow from 3.36 billion EUR to 2.37 billion EUR in February, reflecting an improvement in exports during the month. Euro zone’s trade surplus could narrow from 7 billion EUR to 5.1 billion EUR in the same month. Stay tuned for these reports at 9:00 am GMT.

Lastly, euro zone’s March CPI reading is expected to land at 1.5%, same as in February. It’s annualized core CPI for the month could come in at 0.9%. While stronger than expected reports could allow the euro to pocket more gains, developments in the Greek bailout situation would also affect the euro’s movement this week. Keep your eyes and ears open at all times!