Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
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Bow chicka wa wa! The euro sexily strutted its stuff yesterday as it walked up the charts to create new highs against the Greenback and the yen. EURUSD zoomed up from 1.3471 to hit an intraday high of 1.3596 while EURJPY rose from 113.45 to peek at 114.03.

The euro zone was the proud recipient of a couple of positive reports yesterday. First off, the GfK consumer sentiment index gave a reading of 4.9 to beat the expected 4.2. Following last week’s positive IFO business climate report, yesterday’s release suggests that things are looking up for the euro zone’s largest economy. Germany ain’t the region’s star for nothing!

Adding to the good vibes was the better-than-expected German preliminary CPI report, which bested forecasts for a 0.2% downtick by recording a minor 0.1% decrease in prices.

But the euro zone received a bit of bad news, too. French consumer spending was down a whopping 1.6% in August as analysts expected to see a more modest 0.2% decline following the 2.7% uptick in July. Maybe this is why many analysts believe there is a lot of uncertainty surrounding the recovery. It’s sort of hard to gauge how the region will fare as a whole when its member countries are growing at different paces.

Up ahead at 9:00 am GMT, we have the industrial sentiment report which is slated to downgrade its reading from -4 to -5 for the month of September. You know the drill! Watch out for an upside surprise that could send the euro to new heights!

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Euro zone didn’t release any top-tier economic reports yesterday yet the euro was still able to chalk up some gains against its counterparts. EURUSD climbed to a high of 1.3644 while EURJPY closed 4 pips shy of the 114.00 handle.

It seems that US dollar weakness continued to drive EURUSD up the charts as plenty of traders speculate that the Fed will implement more easing measures. With that, the euro could be poised for more gains, especially if today’s economic reports churn out better than expected results. At 7:55 am GMT, Germany will release its unemployment change report, which is expected to show that joblessness decreased by 20,000 in August. If the actual figure meets or beats the consensus, it would mark a significant improvement over the 17,000 decrease in unemployment seen last July.

Later on, euro zone will release its CPI flash estimate for September. Annual inflation is projected to rise from 1.6% in August to 1.8% this month. Stay tuned for the actual report due 9:00 am GMT today.

Another event risk in the euro zone is the repayment of European bank loans to the ECB. If those banks are able to repay majority of the 225 billion EUR in loans, it would reassure investors that European banks are doing much better. Otherwise, if banks opt to roll over part of this debt into shorter-dated loans, it would signal that the banking sector is still in trouble and that they need to rely on the ECB. Make sure you keep your eyes and ears peeled for any updates on this.

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The euro extended its winning streak against the Greenback as EURUSD made a new high of 1.3684. Euro zone reports came out strong, overshadowing the effect of Moody’s debt downgrade on Spain.

Wait a minute, Spain got a downgrade from Moody’s?! Well, that explains why EURUSD dipped to a low of 1.3559 during the London session. It turns out that the credit rating agency downgraded Spanish debt from AAA to Aa1, citing the country’s weak growth prospects and deterioration of their government’s fiscal strength as the reasons for the downgrade. Even though this news should be very bearish for the euro, traders seemed to shrug it off as old news since Fitch and S&P already doled out their downgrades months ago.

What provided the euro some support in yesterday’s trading was the stronger than expected German employment report. Unemployment decreased by 40,000 in euro zone’s largest economy, bringing their unemployment rate down to 7.5%. That’s its lowest level in almost two decades! On top of that, the CPI flash estimate met expectations and posted a 1.8% annual increase in price levels.

But the good news doesn’t end there… The loan repayments by the euro zone banks turned out well as it revealed that fewer banks needed assistance from the ECB. Phew! It looks like their banking sector isn’t in that much trouble.

For today, the important report to watch out for is the euro zone unemployment rate due 9:00 am GMT. Their jobless rate is expected to hold steady at 10.0% but we might be in for a better reading since Germany just reported an improvement in employment. Aside from that, Germany will release its retail sales report at 6:00 am GMT and this could print a 0.5% uptick for August. Also watch out for the release of the euro zone final manufacturing PMI and Italy’s unemployment rate at 8:00 am GMT.

333

There’s just no stopping the euro! The juggernaut currency went through its major counterparts the way Chuck Norris tramples through enemies. Most noticeable was the big move on EURUSD, which forged new highs and rose to 1.3780 from 1.3688.

The euro brushed off last Friday’s weak data. The first bit of bad news came with Germany’s retail sales report, which dropped 0.2%. Many were actually very optimistic about August’s results and were expecting to see a 0.4% uptick after July posted a 0.4% decrease.

The decline in retail sales came as quite a surprise since consumer confidence and employment have been picking up. This is beginning to raise concerns because it’s hard to keep the recovery going if consumers are keeping their money in their pockets.

In other news, the September euro zone manufacturing PMI gave euro bulls reason to smile when it posted a reading of 53.7, beating both forecasts and the previous month’s reading by 0.1. However, this was countered quickly by the release of the euro zone unemployment data. The unemployment rate refused to budge and stayed at 10.1% as most expected it to fall to 10.0%.

This week, there are a few biggies to look out for, starting with the retail sales report. Will tomorrow’s release follow in the footsteps of Germany’s retail sales figures and print lower than expected? Analysts are expecting to see a 0.2% uptick to follow up the 0.1% increase in July. Catch the report at 9:00 am GMT!

Then at 10:00 am GMT on Wednesday, Germany will roll out its factory orders data. The report is slated to show a bounce by posting a 0.9% uptick in August after July recorded a 2.2% drop.

Thursday takes the cake with the ECB’s interest rate decision at 11:45 am GMT. Though most aren’t expecting to see rates move from 1.00%, it’d be best to stay on your toes. An upside or downside surprise may rock the euro.

Minutes after the interest rate announcement, the ECB will hold its press conference at 12:30 pm GMT. Don’t you even think of missing this one! You might miss out on what the central bank think about the economy and any clues about future policy moves if you do!

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The bulls dumped the euro during yesterday’s trading, much like how John Mayer ditched his Twitter followers. Tsk, tsk. EUR/USD peaked at 1.3807, 11 pips from the week open price, then tumbled to the day’s close at 1.3685. Ouch!

With its 111-pip loss, the shared currency became the biggest loser to the dollar among the major currencies. Some naysayers are taking the sell-off as a sign that investors are starting to get sick of being love sick with the euro. Ha! It makes sense, considering that the shared currency has been on a three-week winning streak.

Yesterday’s reports didn’t help traders fall back into love with the euro either. Spain’s Labour Ministry announced that unemployment in the country rose by 48,100 to 4.02 million in September. Joblessness in the country is now up by 1.2% to 20.0% which is double of the euro zone average. Yikes!

Adding to the bad vibes was the downward revision to Ireland’s economic growth to 0.2%. The Central Bank of Ireland was more optimistic before with its previous forecast up at 0.8%. It might have been the fresh batch of spending cuts that caused the downgrade.

The euro also didn’t get any support from the PPI figure as it showed that prices in the goods sold by producers was lower by 0.1% than the 0.2% forecast in August.

Good thing Chinese Prime Minister Wen backed it up when he announced that the Asian superpower is rooting for a steady euro and that it will keep its European Bond holdings. He also pinky-swore that China will buy Greek debt when another bond auction comes around. If he keeps his promise, then we may just see more confidence from investors in the coming months. Speaking of which, yesterday we saw that the Sentix index came in at 8.8 and topped its 8.3 consensus for August. Boo yeah!

Today we’re in for a treat with a roster of economic reports from the euro. We start off things early at 6:00 am GMT with the Irish Services PMI and the Spanish Services PMI at 7:15 am GMT. Figures higher than their respective readings of 52.9 and 49.2, could be be bullish for the euro.

We then resume our list for services PMIs at 7:43 GMT. The one for Italy is seen at 50.6 while France’s is eyed at 58.8, and that of Germany is projected at 54.6. The services PMI and composite PMI for the entire region are anticipated to have maintained their readings for two straight months at 53.6 and 53.8, respectively.

Lastly, we have the retail sales reports for August. The market is eyeing a 0.2% increase during the month following the 0.1% figure it posted in July. If you’re planning to go long on the euro, you better keep your fingers crossed for the actual figures to come in higher than expected. Good luck y’all!

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Quick, I think I need CPR! The euro took my breath away when it tapped a new 6-month high against the dollar at 1.3860! Ha! It inched down a bit to close the day with a 147-pip gain at 1.3836. Against the yen, it was able to bag 92 pips as EUR/JPY ended Monday at 115.11. Hollah!

The roster of economic reports we got yesterday was as mixed as a bag of nuts. Lucky for the euro bulls, there was enough investor lovin’ to go around the markets.

Euro zone’s services PMI and composite PMI for September both clocked in at 54.1, beating their respective forecasts of 53.6 and 53.8. The one for Italy tapped at 51.3 and overshot its 50.6 consensus while that of Germany exceeded the anticipated 54.6 reading by printing at 54.9. Boo yeah!

On the other hand, France fell short of expectations by 0.6 when its actual services PMI figure came in at 58.2. The retail sales report also failed to impress when it showed that consumer spending declined by 0.4% in August and missed its 0.2% growth forecast. However, some of our homies in the FX hood might have already seen this coming, given the decline in the Germany’s and France’s retail sales figures.

What made the euro breathtaking was the discussion that French Economy Minister Lagarde had with Russia about the country’s interest in diversifying its currency reserves to include the euro. Whaddup! It seems like that was enough to pump up investor confidence for the euro, as the currency continued to kick the hineys of most of its counterparts despite talks of Ireland getting another credit rating downgrade from Moody’s. Then again, if Moody’s does take down the rating to Aa3, that will only make its assessment of Ireland at par with that of Fitch and Standard & Poor. So it’s not like it would be anything new.

On deck today, we have the final second quarter GDP reading for the euro zone at 9:00 am GMT. Analysts are not expecting any revision from the initial report which showed a 1.0% quarterly growth rate for the region. Then at 10:00 am GMT, we have the German factory orders for August which is eyed to erase a part of its 2.2% decline in July with a 0.9% growth forecast.

That’s all folks! May the pips be with you!

336

The euro just can’t, won’t, don’t stop yo! Once again, it had its way with the dollar as EUR/USD leapt to new heights. The pair was chillin’ and pretty much traded sideways at the start of the day. It only started its ascent when the New York session began. It eventually closed exactly 100 pips higher for the day at 1.3936.

The final quarterly GDP figures didn’t present startling results when it printed the same 1.0% that analysts had predicted.

On the other hand, German factory orders gave us a pleasant surprise when it followed up July’s 2.2% downtick with a 3.4% uptick in August to overshoot forecasts for a 0.9% increase. Germany’s strong performance highlights its key role as the euro zone’s largest economy and suggests that it’s starting to gain momentum.

Moving on to less positive news, the ratings agency Fitch decided to downgrade Ireland’s credit rating… Again! This time, they set it a notch lower from AA- to A+ to reflect the costs of recapitalizing banks and the negative outlook for the economy.

Today, we’ve got a big one on our hands. The ECB will be announcing its interest rate decision at 11:45 am GMT today, but will probably keep rates steady at 1.00%. But be all eyes and ears for the ECB press conference at 12:30 pm GMT! Investors worldwide will be tuning in to see what the central bank has to say about taking another shot at an exit strategy. Don’t get left behind! They might just let slip a few hawkish remarks that could send the euro soaring.

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After struttin’ its swagger for two days on the charts, the euro staggered during yesterday’s trading as it ended the day with a 24 pip loss against the dollar at 1.3912. EUR/JPY also closed lower at 114.64 after opening the day at 115.55.

  We saw mixed economic reports yesterday. First on deck was the French trade balance printing a 4.93 billion EUR deficit for August when the market anticipated imports to have exceeded exports by only 4 billion EUR.  Then came Germany’s industrial production that topped expectations by  0.1% when showed that activity increased by 0.3% during the month. Word  on the street is that it was ECB President [Jean-Claude Trichet](http://www.babypips.com/forexpedia/Jean-Claude_Trichet)’s speech, which followed after the central bank  announced that its keeping rates pegged at 1.0%, that allowed EUR/USD to peak at 1.4030. 

Despite warning that strong volatility in the forex market having  negative effects on economies, he didn’t particularly pick on the euro.  This was good news for the bulls as it implied that the bank isn’t too  concerned about the currency’s strength weighing on the region’s  recovery. Too bad for the euro, a lot of bulls took profit and ditched  it ahead of the NFP report. Boo hoo!

  Today we’re blank for top-tier reports from the region. However,  you’d probably want to keep tabs on Germany’s trade balance figures at  6:00 am GMT and note that the consensus is an 11.5 billion EUR surplus for August, and the country’s current account which is eyed at 7 billion EUR for October. These reports may help the shared currency hustle if they reveal better-than-expected figures. 

Note that the [NFP](http://www.babypips.com/forexpedia/Employment_Report) report may rock the markets later, so be careful out there!
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Oh-oh-oh-oh, oh-oh-oh-oh-oh, uh-oh euro, uh-oh my gosh! The euro ended Friday winning only against the dollar with 17 pips as EUR/USD closed at 1.3929. It lost against its other major counterparts, the most against the pound with 41 pips, then the yen with 33 pips, and 26 pips to the Swissy. Is trouble on the euro’s horizon?

It might be, given Eurogroup Chairman Jean-Claude Juncker’s comment  about the euro being too strong, reaching 1.4000 against the dollar.  Germany’s trade balance figures for August which came in lower than  expected, might have supported Juncker’s concern as it implies that  Europe’s biggest economy might be hurting from the strong euro, and thus  supported Juncker’s comments. The report showed that exports exceeded  imports by only 9 billion EUR, less than what the market was eyeing at 11.50 EUR billion. As if the bad vibes weren’t enough, INSEE then reported that the French government’s deficit grew in August to 112.1 billion EUR from 93.1 billion EUR in July. Tsk, tsk…

  Make sure you tune in to today’s roster of economic reports as they  may give us more insight on how the euro zone’s economy is faring given  the euro’s strength. We start things early at 6:45 am GMT  with a couple of French reports. Manufacturing activity in the country  is seen to have slowed in August with the index eyed at 0.4%, down from  July’s 1.4% reading. A slowdown is also projected for the overall  industrial sector. The French industrial production index is projected  at 0.2% after it printed a 0.9% growth rate in the previous month. 

Tomorrow Germany will once again take center stage with a few inflation data. Oh yeah, we’ll also hear ECB President  Jean-Claude Trichet’s speak in New York. You may want to keep tabs on  that as he may comment on the euro’s gains as well. Good luck!
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Despite better-than-expected results on economic data from euro zone, EUR/USD was unable to find support to continue its rally. After opening the week higher at 1.3986, the pair just kept dropping throughout the day and eventually close 113 pips lower at 1.3873.

If you haven’t been paying attention to the economic calendar, here’s the dilly yo…

The first report that was published was the French manufacturing production report. It was initially predicted to show a rise of 3.7% year-on-year, but printed 4.4% instead. Don’t get fooled by the results though. While there is an improvement on a yearly basis, if you look at the month-on-month figure, you’d see that manufacturing production actually stayed flat, hinting that economic activity is slowing down.

The second one the Italian manufacturing production report. It revealed that production soared 1.6% month-on-month due to the unexpected surge in exports. The actual figure was a welcome surprise, as analysts expected a drop of 0.3%.

Despite U.S. traders on holiday, today could be a big one for the euro as Germany is scheduled to release the final version on its consumer price index at 6:00 am GMT. The expectation is a fall of 0.1% in prices in September, but if the actual figure comes in higher, we could see EUR/USD stage another rally!

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After dipping to a low of 1.3775, EURUSD kept soaring higher throughout the day and closed at 1.3867. Would it continue to rally and break past the 1.4000 handle this time?

Economic data released from Germany yesterday came in line with expectations, reflecting that inflationary pressures are still up and about in euro zone’s largest economy. Their final CPI clocked in a 0.1% downtick for September while their wholesale price index chalked up a 1.0% increase.

But what kept the euro pumpin’ iron yesterday were comments from ECB member Axel Weber, who suggested that the central bank end its bond purchase program already and start hiking interest rates. My my, such confidence in the euro zone economy!

Just a few days ago, ECB President Jean-Claude Trichet mentioned that the euro zone doesn’t need any stimulus anymore. As Forex Gump pointed out, the ECB seems to be the only central bank who’s not jumping on the QE bandwagon and this is probably the reason why the euro keeps rising lately.

Still, we might have to look at the upcoming economic reports from euro zone to figure out whether their economy could survive without stimulus. For today, the industrial production report is on deck and this could post a 0.7% increase for August. If the actual figure comes in better than expected, it would be much higher than the 0.1% uptick seen in July, suggesting that production in the region is on a roll. Watch out for that at 9:00 am GMT.

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The euro shook its tush on the charts during yesterday’s trading with a positive figure giving it swagger. It ended the day 39 pips higher against the dollar at 1.3956 and 20 pips higher against the yen at 114.10. But it looks like it didn’t get enough lovin’ as EUR/USD still wasn’t able to close above 1.4000. Boo!

Yesterday we saw that industrial production in August grew by 1.0%, much better than the 0.7% uptick that the market was eyeing and the 0.1% increase it posted back in July. This is good news to the euro bulls because the better-than-expected figure implies that the currency’s strength has had limited impacted on spending and output. It could also give the ECB one more reason to maintain it’s seemingly laid-back attitude on the euro’s rise.

Ahh, wait! It seems like the fourth time is the charm for the euro! As of this writing, EUR/USD has broken past resistance at the psychological handle and just reached its 9-month high against the dollar at 1.4072! Up top yo!

For today, you may want to keep tabs on Greece’s unemployment rate at 6:00 am GMT, the ECB monthly bulletin at 8:00 am GMT, and Deutsche Bundesbank’s President Axel Weber’s speech at 10:00 am GMT, as these may determine whether or not EUR/USD will keep hustling above 1.4000.

Greece’s labor market is seen to still be struggling with its unemployment rate seen to have been higher in September at 11.9% than its 11.6% reading in August. If the actual figure comes in worse than expected, worries about the debt-ridden country’s fragile recovery may hold back the euro. Yikes!

Meanwhile, if you’re planning to place your bets on the shared currency, you may want to spot for hawkish remarks on the ECB bulletin and Weber’s speech. Good luck!

343

The euro pulled off a Kanye when it stole the spotlight during yesterday’s trading. It impressively broke past resistance at 1.4100 and posted its 9-month high against the dollar at 1.4124. Whaddup! EUR/USD then dipped a bit to close the day at 1.4072, bagging 115 pips from the dollar.

Lucky for the shared currency, we didn’t spot any dovish words from German Central Bank President Axel Weber’s speech and the [ECB](http://www.babypips.com/forexpedia/ECB) Bulletin.  The absence of which might have eased concerns about European central  bankers being upset about the euro’s recent strength.

  However, the HICP and trade balance  reports may suggest otherwise as some naysayers point to the euro  struttin’ so much swagger on the charts for their modest forecasts.  Later at 9:00 am GMT, market participants are  expecting to see the headline inflation figure to have increased by a  puny 0.2% in September while the trade deficit is anticipated to have  widened to 800 million EUR in October from 200 million EUR in September. 

It would probably be good to brace yourself for lower-than-expected  figures. Note that the most recent producer price report showed a measly  0.1% increase in prices and Germany’s CPI  decline by 0.1% in September. Take note that Germany also reporting a  smaller trade [surplus](http://www.babypips.com/forexpedia/Surplus) and France showing a trade deficit, may be signs  that the strong euro could be weighing down on exports. But ya know,  that’s just me.

Good luck and may y’all have a great weekend ahead!

344

Oops, it did it again! After playing above the psychological 1.4000 handle against the dollar last Friday, the euro gave up its gains on dollar strength and not-so-stellar economic reports from the region. EUR/USD reached an intraday high of 1.4158 before ending the day 98 pips lower at 1.3974.

Aside from profit-taking on the dollar shorts, it seemed that the euro bulls were none too happy about the region’s trade balance report last Friday. The data clocked in at a deficit of 1.4 billion EUR, which was lower than July’s 0.2 billion EUR deficit and the expected surplus of 1.3 billion EUR.

Will the euro have another chance at maintaining its gains this week? No economic reports are scheduled to hit the charts today, but I hear that the ZEW economic sentiment reports will get the party started tomorrow at 9:00 am GMT.

The German producer price report will also make an appearance on Wednesday at 6:00 am GMT, followed by a slew of manufacturing and services PMIs from France, Germany, and the whole region from 7:00 am GMT to 8:00 am GMT.

Lastly, the data on the German Ifo business climate report will be released on Friday at 8:00 am GMT. Will the report reflect the business sector’s concerns of the rapid rise of the euro?

Don’t even think of missing out on these reports!

345

New York was the trading session where pip-dreams were made for the euro. It hustled some muscle after bottoming at 1.3831 during the Asian session yesterday, and closed with a 6-pip win against the dollar when EUR/USD settled at 1.3992. Boo yeah!

  What caused the euro sell off early on the day? Well, it might have been another case of “loose lips, sink pips.” Over the weekend, ECB President [Jean-Claude Trichet](http://http://www.babypips.com/forexpedia/Jean-Claude_Trichet) publicly countered [ECB](http://http://www.babypips.com/forexpedia/ECB) member Axel Weber’s remark to end the bank’s bond purchases. According to Trichet, the economic recovery is fragile and still needs support. Yikes!

  Good thing he, along with ECB member Ewald Nowotny, affirmed traders that the central bank isn’t worried about euro’s strength and that might have been enough to get the bulls hustlin’ again. 

  For today we have euro zone’s current account and ZEW’s economic sentiment reports on tap for the shared currency. However, it looks like not many are keeping their hopes up with the not-so-optimistic forecasts.

  At 8:00 am GMT, analysts are expecting the value of the region’s [imports](http://www.babypips.com/forexpedia/Imports) to have been more than the value of its [exports](http://www.babypips.com/forexpedia/Exports) in August by 1.9 billion EUR. Then at 9:00am GMT, ZEW’s report is seen to reveal pessimism among investors and analysts in the euro zone with the economic sentiment index for October seen at -2.0. The German version is also anticipated to be lower for the month at -7.0 following its -4.3 reading in September.

Be on your toes for these reports later and remember that higher-than-expected figures will probably be bullish for the euro. Good luck!

346

Geronimooo!!! The euro continued its plunge against its major counterparts yesterday after the not-so-stellar economic reports pumped out of the region. EUR/USD capped the day with a 263-pip loss at 1.3729, while EUR/JPY skidded to a 163-pip loss at 111.95. Yeouch!

It seemed that the currency bulls got bored with munching on the euro and turned their attention to the strength of its counterparts. Of course, it also didn’t help that the economic reports are as mixed as a bag of nuts.

Although the ZEW report showed improved sentiment in Germany’s current conditions and the euro zone’s economic outlook, the expectations element of the German ZEW dropped to a 21-month low. Also, the current accountreport revealed that the account deficit swelled to 7.5 billion EUR, up from July’s 4.1 billion EUR figure. Yikes!

Will the euro have another shot at gaining some pips? Only the German producer price index at 6:00 am GMT is scheduled for today, but keep close tabs on reports outside the region! I hear that many central bankers are providing a good show with their conflicting speeches. Don’t miss all the drama!

347

Ka-pow! The euro knocked down its major counterparts yesterday when a triple combo of economic events hit the markets. Improved risk appetite, hawkish ECB comments, and better-than-expected economic reports sent EUR/USD 221 pips above its open price at 1.3950. Meanwhile, EUR/JPY also wiped out most of Tuesday’s losses with a 130-pip gain at 113.25.

The euro bulls partied like it’s 2012 yesterday when the German PPI for September clocked in at 0.3% when market geeks only expected a 0.2% figure. This signaled healthy demand for Germany’s goods, and supported German Chancellor Angela Merkel’s statement that the country is performing better than markets estimated.

European Central Bank member Jϋrgen Stark also joined the party when he commented that a loose monetary policy can have negative implications, and suggested that the ECB could raise its interest rates. The improvement in risk appetite capped the day for the euro as the market geeks adjusted their positions in anticipation of better-than-expected economic reports from China.

Will the bulls extend their party today? A slew of manufacturing and services PMI reports from France Germany, and the whole region are scheduled for release today from 7:00 am GMT to 8:00 am GMT. The data are generally expected to ease from its previous figures, but better-than-expected numbers could push the euro further up the pip charts.

Don’t even think of missing these reports, kids!

348

Action on EUR/USD seemed like a virtual tug of war yesterday as both bears and bulls tried to claim the pair. After opening at 1.3950, price dipped down to 1.3872 in favor of the bears. After that, the bulls took charge and pushed it up to 1.4051. But in the end, the bears had the last laugh as EUR/USD fell back down and closed at 1.3924.

The October PMI reports were mixed—we had both good and bad results. But ultimately, they leaned towards the negative end of the spectrum. France started the day off with worse-than-expected manufacturing and services PMI numbers. Soon after, Germany countered with its better-than-expected PMI figures.

As a whole though, the euro zone failed to meet expectations as the composite PMI fell short of forecasts of a reading of 53.7 when it dropped from 54.1 to 53.4 in October. Similarly, the region’s services PMI fell from 54.1 to 53.2, instead of posting a reading of 53.7 as predicted. Analysts blame the big decline in France for the slump in service growth.

As I said, yesterday’s releases had a bit of good news, too. The euro zone’s manufacturing sector managed to print an uptick in its PMI from 53.7 to 54.1 which implies that the euro’s strength hasn’t been hurting demand much.

Looking ahead, we’ve got the German IFO business climate report on tap at 8:00 am GMT. Don’t be surprised to see the reading drop from 106.8 to 106.5 since that’s what most analysts forecasted. But do be surprised if the report prints higher than expected! It might just spark a bull run.

Capping the week off at 1:00 pm GMT is the Belgium BNB sentiment report, which is slated to follow up last month’s -3.4 with a reading of -3.8 for the month of October. As usual, be on the lookout for better-than-expected results which may boost the euro. Good luck with trading and enjoy your weekend, kids!

349

Even though it dipped to a low of 1.3859 last Friday, EUR/USD fought hard to keep its head above the 1.3900 handle. Price action was a little choppy then but EUR/USD managed to close at 1.3929. Meanwhile, EUR/JPY also struggled to stay above the 113.00 handle but was eventually able to close 32 pips above that level.

Thanks to better than expected German business confidence figures, the euro was able to find some support at the end of the week. The German Ifo business climate reading rose from 106.8 to 107.6 in October, beating the consensus of 106.5. This marks the index’s fifth consecutive monthly rise, confirming that business conditions continue to improve in euro zone’s largest economy.

Today, euro zone is set to release its industrial new orders for August. After a 2.0% decline in July, the total value of new purchase orders placed with manufacturers is expected to have rebounded by 2.1% during the next month. Since this is a leading indicator of industrial production, a stronger than expected figure could provide further support for the euro. Watch out for the actual figure due 9:00 am GMT today.

On Tuesday, the spotlight will shift back to Germany as it releases its consumer climate report and the change in import prices for September. Will consumers give the euro some lovin’ just like the business climate report did? Consumer sentiment is expected to climb from 4.9 to 5.2 in October, but be on the lookout at 6:00 am GMT in case the actual reading disappoints. Meanwhile, German import prices are expected to post a 0.1% uptick, a slower increase compared to the 0.2% rise seen in August.

Germany’s preliminary CPI and France’s consumer spending report are on Wednesday’s docket. Both reports are expected to post rebounds over their previous readings. Germany’s inflation report is projected to print a 0.1% uptick in October after suffering a 0.1% decline in the previous month while consumer spending in euro zone’s second largest economy is expected to rise by 0.5% after seeing a 1.6% drop last time.

Phew! That’s a lot of reports to watch out for. But wait, there’s still more!

On Thursday’s schedule, we have Germany’s unemployment change report and a speech by ECB President Jean-Claude Trichet. Both reports could have huge effects on the euro’s movement so I suggest you keep your eyes and ears peeled starting 8:00 am GMT.

To end the week, euro zone will release its own CPI report and employment reading for September. Inflationary pressures are expected to be slightly lower in October as the CPI could dip from 1.8% to 1.7% this month. The unemployment rate could hold steady at 10.1% but a better than expected figure could spark a euro rally. Stay on your toes, folks!

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Oomph! The euro took a hit against its major counterparts yesterday despite the region’s better-than-expected economic data. EUR/USD finished the day 10 pips lower at 1.3969 after hitting an intraday high of 1.4081, while EUR/JPY fell by 70 pips to 112.87.

Yesterday the industrial new orders report clocked in a 5.3% growth in August. This is way better than July’s 1.8% decline and the expected 2.1% rise for the month.

But the euro lost some pip-lovin’ when Pacific Investment Management Co. Chief Executive Officer Mohammed El-Erian speculated that Greece is likely to default in three years on weak budget-cutting measures. Uh-oh, is it time for Greece to sharpen its axe on its government budget like what U.K. Chancellor George Osborne did in the U.K.?

The euro will have another shot at gaining popularity against its counterparts today when the German consumer climate report is released at 6:00 am GMT. The index is expected to print at 5.2 against its 4.9 figure in September, but a higher figure might get the attention of the currency bulls.

Deutsche Bundesbank President Axel Weber will also make headlines at 5:00 pm GMT when he gives his speech in Berlin. Will the ECB hawk give his two cents on the growing rift among the ECB members regarding the future policies?

Don’t miss all the drama, folks!