Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
391

Another one bites the dust! The euro continued to take a beating from its major counterparts yesterday on lingering risk aversion in markets and not-so-awesome euro zone reports. EUR/USD dropping by another 31 pips at 1.3095, while EUR/JPY capped the day 26 pips lower after hitting an intraday high of 110.50. Meanwhile, EUR/CHF continued to make record lows as it fell by another 106 pips in the pip deeps.

It seemed that currency bulls were none too happy that credit ratings giants are playing Amazing Race to see who could downgrade the most euro zone economies before the year ends. Moody’s already set off a warning to Portugal, while Fitch sent a shout out Greece.

Of course, it didn’t help the euro that the region has been posting disappointing economic reports. Yesterday’s GfK consumer climate data missed the expectations when it slipped from November’s 5.5 to its 5.4 index number.

Italy’s quarterly unemployment rate was the only silver lining in the very dark cloud when it tumbled to 8.3% from its 8.4% figure in the second quarter.

Check out if the roster of economic data today can give the euro a chance at gaining some pips. The German import prices report at 7:00 am GMT will is expected to rise by 0.5% in November, while the Italian retail sales report at 9:00 am GMT is estimated to print a 0.2% increase in October.

The last to hit the pip streets is the Belgium NBB business climate at 2:00 pm GMT. Analysts see the index to rise to 1.2 after clocking in at 0.8 in November.

Stick around, kiddos!

392

“Ho ho noooooo!” The market Grinch roundhouse-kicked Santa and took over the euro’s price action yesterday on mixed economic reports from the euro region. EUR/USD dropped from its intraday high of 1.3182 to 1.3099, and EUR/JPY fell by another 22 pips at 109.43. Meanwhile, EUR/CHF continued to test the limits of the pip deeps, plunging 89 pips more at 1.2469.

The euro region managed to print better-than-expected economic data yesterday. German import prices climbed to a seven-month high of 1.2% in November after declining by 0.2% in October. Italy’s retail sales also surprised markets to the upside by showing 0.3% growth in October when analysts only pegged the figure at 0.2%. Finally, the Belgium NBB business climate that gives a sneak peek on economic health and future business activity rose to its 3.1 index number, its highest level since August 2007.

Those reports might give the bulls a warm, fuzzy feeling in their tummies, but the markets also paid attention to the other hullaballoo happenin’ beyond the economic reports.

For one, rumors of the Allied Irish Bank needing additional capital got around and put a damper on the euro bulls’ shopping spree. Good thing that news from China managed to cancel out some of the gloom. A Portuguese newspaper recently printed that China could buy as much as 4-5 billion EUR worth of Portuguese bonds. Hmm, a Christmas wish list, perhaps? Let’s see if China can play Santa for Portugal!

Only the French consumer spending data is scheduled for today, and the euro traders will only have to wait until 7:45 am GMT to see it. Market junkies expect the data to clock in a 0.5% growth in November after declining by 0.7% in October, but a higher figure just might give the euro a boost before Christmas.

Good luck with your last trades for the year!

394

EUR/USD opened the last trading day of 2010 at 1.3286 and skyrocketed past two psychological handles, tapping its 2-week high at 1.3425. Sha-bam! It then dipped a little to end the year at 1.3372 with the euro scoring an 86-pip gain.

Aside from profit-taking and risk appetite, word on the street is that German Chancellor Angela Merkel helped the euro hustle. She gave a shoutout to the currency, saying that it is still the foundation of the strong German economy despite debt problems weighing it down. Aww, ain’t that sweet?

There was also Estonia joining the euro zone that might have also boosted investor confidence. Boo yeah!

See if the good vibes will keep on rollin’ with today’s roster of economic reports. At 9:00 am GMT we’ll get dibs on the final reading of France’s and Germany’s manufacturing PMIs for December. A figure higher than France’s previous 56.3 reading and a number better than the expected 60.9 reading for Germany will probably have a bullish effect on the currency.

On the other hand, a consensus forecast of 56.8 is expected for the euro zone manufacturing PMI.

Tomorrow the two EZ hotshots will continue to dominate the economic front with the French Consumer Confidence report and Germany’s labor figures on tap. At 7:45 am GMT, we’ll see if the French have grown more pessimistic on the economy in December if the report prints a figure worse than its -32.0 reading for November.

Then at 9:00 am GMT, the market is anticipating to see that Germany’s unemployment rate remained steady at 7.5% in November and that the number of jobless people fell by 12,000 during the month.

Lastly, at 10:00 am GMT, we’ll have the inflation figures for the euro zone. Analysts have bet their two cents that prices of goods and services were higher by 2.0% in December compared to a year before.

Stay tuned to these reports. Good luck!

395

Whew! That was a close one! The euro managed to gain back most of its losses against its major counterparts yesterday on positive economic reports and low-volume trading. EUR/CHF dropped to an intraday low of 1.2414 before capping the day at 1.2474. Meanwhile, EUR/USD ended the day unchanged at 1.3349 after plunging to 1.3250 during the London session.

Good thing that other positive economic reports from the euro zone made up for the slight downward revision in Germany’s data. The final German manufacturing PMI slipped from 60.9 to 60.7, but the French and Italian PMI managed to print higher than expected. Also, the whole region’s PMI was revised higher from 56.8 to 57.1 in December. Boo yeah!

Will the traders from yesterday’s closed markets join the euro-buying spree? Maybe the German unemployment change out at 8:55 am GMT can help them decide. The number of unemployed workers is expected to go down by 12,000, but a larger figure could provide the euro more traction in the charts.

At 10:00 am GMT we’ll also get hold of the region’s annualized CPI flash estimate, while Italy will release its preliminary CPI figure for December.

Don’t miss out on these news-makers!

396

The euro’s price action yesterday was as mixed as the spices on my momma’s pudding on mixed economic reports from the euro zone. EUR/USD closed 53 pips lower than its open price after hitting an intraday high of 1.3434. Meanwhile, EUR/CHF broke its falling trendline on the daily chart when it gained by 45 pips at 1.2618.

Germany’s employment data shocked the markets when it broke its positive streak and printed a decline for the first time in 17 months. The data showed that 3,000 workers lost their jobs when analysts pegged an increase of 12,000 workers. Meanwhile, French consumer confidence also disappointed expectations with its first decline in five months, while Italy’s CPI showed a 0.4% uptick.

The region’s consumer prices lessened the pressure on the euro when it showed an annualized 2.2% increase in December. Okay, maybe higher commodity prices are to blame, but the high figure managed to ward of a few euro bears nonetheless.

Let’s see if the euro zone’s economic reports can get back on its feet today with the industrial orders report due at 10:00 am GMT. An increase of 1.3% is expected after the report’s 4.2% slip in September.

The final version of the services PMIwill also be on tap today at 9:00 am GMT, as well as the monthly producer price index of the region scheduled at 10:00 am GMT. Don’t forget to catch these reports!

397

And the debt drama continues! Just when you thought that fiscal conditions in the euro zone are about to get better, new worries popped up again. Because of that, EUR/USD fell from its daily open price of 1.3298 to a low of 1.3125. Ay caramba!

It turns out that investors are starting to shun away from euro zone investments, particularly those from the heavily indebted nations. The Swiss National Bank even announced that it wouldn’t accept Irish bonds as collateral! With a major central bank rejecting Irish credit, other funds and investors are likely to dump their Irish bond holdings as well. Aside from that, other major investors also mentioned that they won’t be dipping into government bonds that have high credit risk. Well, how are those debt-ridden nations supposed to fund their deficits then?!

On a brighter note, euro zone’s industrial production report came in better than expected as it logged in a 1.4% increase for October. However, the previous figure was downwardly revised to show a 4.2% decline for September.

For today, keep your eyes and ears peeled for the release of euro zone’s retail sales report and German factory orders at 5:00 am and 6:00 am respectively. Retail sales are expected to be up by 0.3% in November after posting a mere 0.1% uptick in October. Meanwhile, factory orders in Germany are projected to have risen by 1.0% in November, slightly slower than the 1.6% seen the month prior.

Better than expected figures could allow the euro to regain some of its recent losses, but make sure you also stay tuned for any updates concerning the euro zone debt drama since these could direct the euro’s action today.

398

The euro kept tumbling down yesterday as debt funding problems continued to haunt the euro zone. Because of that, EUR/USD hit a low of 1.2997 after opening at 1.3156 while EUR/JPY also crashed more than a hundred pips from its open price of 109.52.

The euro seemed to ignore the economic figures released yesterday as it continued to lose ground against its major counterparts. Even though German factory orders came in much better than expected and posted a 5.2% jump, the euro was still weighed down by ongoing funding concerns for the heavily indebted nation in euro zone. As I mentioned in my euro zone commentary yesterday, a number of investors decided against lending funds to these nations since they worried about high credit risk.

Aside from that, euro zone retail sales might have also contributed to the euro’s decline. The report printed a 0.8% drop for November while the previous month’s figure was revised downwards to show that retail sales remained flat in October.

Today, it will be Germany’s turn to release its own retail sales report at 2:00 am GMT. After posting an impressive 2.3% rise in October, the increase is expected to be slightly slower in November. If the actual figure disappoints just like the euro zone retail sales reading did, the euro could suffer another round of losses. Later on, Germany will release its industrial production report, which is expected to show a 0.1% dip for November.

Also stay tuned for ECB President Jean-Claude Trichet’s speech at 4:00 am GMT today. Could the central bank head give some words of reassurance regarding the euro zone debt drama? If he does, the euro might have a chance to recover. But if he chooses to focus on how much trouble their region is in, the euro could mark its fifth day in consecutive losses against the Greenback.

Of course debt woes could continue to affect the euro’s movement today but EUR/USD might be in for some consolidation prior to the release of the U.S. employment report. As always, extra volatility can be expected during the NFP and if you’re daring enough to trade EUR/USD after the release, you better check out Forex Gump’s take on the U.S. employment situation.

399

Instead of dancing to Trey Songz’ tune, the euro bottomed out against its major counterparts last Friday on dollar demand and euro-aversion in markets. EUR/USD took a 156-pip hit and ended the day at 1.3224. Meanwhile, EUR/JPY plunged by 124 pips and closed at 107.20.

With red numbers popping all over the euro zone’s economic reports, who could blame the bears from taking advantage? Germany’s retail salesdropped by 2.4% in November, while its industrial production slipped by 0.7%. Also, its trade surplus narrowed down from 14.2 billion EUR in October to 11.8 billion EUR in November. As the region’s largest economy, any disappointing economic report in Germany could lessen the euro’s popularity in markets.

Of course, it also didn’t help that the region itself has been sporting disappointing figures. The euro zone’s unemployment rate managed to stay at a high 10.1, but the third quarter’s GDP number was revised down to a 0.3% growth. Tsk tsk.

Let’s hope that this week’s roll of economic reports can turn things around for the euro! The week will start today at 7:45 am GMT when the French industrial production is released, followed by the Sentix investor confidence at 9:30 am GMT. European Central Bank President Trichet will then take the stage when he gives his speech at the Bank of International Settlement meeting in Basel.

On Wednesday we’ll get hold of the euro zone’s industrial production report in November, and a number higher than October’s 0.6% growth might ward off more currency bears.

Thursday is a big day for the euro bulls and bears as the ECB is set to announce its interest rate decision in a press conference at 1:30 pm GMT. Though the interest rate is expected to remain steady at 1.00%, traders will be tuning in for any clues from President Trichet on the ECB’s next move.

Last but not the least are the region’s CPI figures in December. The numbers are estimated to hold their November figures, but keep close tabs for any surprises!

Good luck on your trading this week, kiddos!

400

Finally, euro bulls can breathe a sigh of relief! After taking a veeeery bad beating last week, they were finally able to lick their wounds. With help from better-than-expected French industrial production data, buyers pushed EUR/USD up 71 pips to have the pair finish at 1.2954.

Who would’ve thought that the French had what it takes to post a 2.3% rise in industrial production in November? Certainly not analysts, who had forecasted a 1.1% increase after seeing a 0.8% drop in October! Not only was this a pleasant surprise, but it also marked the largest month-on-month increase since mid-2009!

No more hard-hitting reports from the euro zone today. But stay on guard, euro bulls! All eyes are on Portugal this week as they’re being eyed as the next possible recipients of a bailout. Keep an eye on market confidence and spreads because they could drag the euro down if things take a turn for the worse!

401

The euro has a new fan in Japan! It found support half way around the world yesterday as Japan pinky-swore to buy euro bonds. EUR/USD was able to climb for the second day in a row, rallying 27 pips to 1.2981 while EUR/JPY leapt 84 pips to 108.01.

With no reports to support the euro domestically, it had to look elsewhere for support. Luckily, Japan had its back! Japan has promised to purchase about 20% of the euro bonds to be issued this month, giving investors hope that Portugal, Spain, and Italy will have no problems pulling off successful auctions.

In the past, such news would have sent the euro to the sky! But it seems like the currency is still being bogged down by the euro zone’s debt issues and the possibility of a Portuguese bailout. After all, successful bond auctions do little, if anything at all, to address the region’s debt problems.

The main report to watch out for today is the euro zone industrial production report due at 10:00 am GMT. According to the forex world’s equivalent of fortunetellers, industrial production growth probably toned down from 0.7% to 0.5% in November. Though forecasts are pessimistic, an upside surprise would help the euro recover more of its recent losses.

And of course, Portugal is set to hold its debt auction today. Stay alert because if this turns out to be a flop in spite of support from Japan, the euro could nosedive!

402

He’s on a roll! The euro managed to gain on its major counterparts for the third day in a row on positive economic reports in the euro zone. EUR/USD climbed by another 150 pips to 1.3132, and EUR/JPY shot up by 94 pips to 108.95.

It seemed that the euro bulls are finding it easier to give some pip-love recently, especially when Portugal’s bond auctions went swimmingly. Yesterday the nation sold 599 million EUR worth of bonds due in 2020 at a yield of 6.716%, which is a bit lower than the 6.806% yield last November 10. Its 2014 bonds also sold for 650 million EUR at a yield of 5.396%, up a bit from 4.041 in October 27.

Recall that the possibility of Portugal needing a bailout had been dampening the euro’s mojo for the past few days, so a lower borrowing cost for the country is good news for the markets.

Of course, it also tickled the funny bones of the bulls that the region posted positive economic reports yesterday. Italy’s industrial production clocked in a 1.1% growth in November after decreasing by 0.1% in October. Meanwhile, the whole region’s industrial production report also printed in the green with a 1.2% growth, up from October’s 0.7% rise.

We’ll see if the euro can keep its winning streak today when the European Central Bank releases its interest rate decision at 12:45 pm GMT. Though many analysts don’t see a move from last month’s 1.0% cash rate, many traders will still tune in to what ECB President Trichet has to say, so don’t let any surprises sneak up on you!

403

Ka-ching! The euro be makin’ it rain pips yo!!! The shared currency skyrocketed yesterday on account of successful bond auctions and hawkish remarks from the ECB. At the end of the day, EUR/USD had rallied 218 pips and finished at 1.3350 while EUR/JPY rose 161 pips and closed at 110.56.

Following up the awesomely successful Portuguese bond auction on Wednesday, Spain and Italy pulled off fruitful auctions of their own. The healthy demand for these debt-ridden nations’ bonds just goes to show that investors haven’t completely lost their confidence in these countries.

At its press conference, the ECB also boosted the euro when it released a few hawkish statements. Even though the ECB decided to hold rates at 1.00% this time around, according to the ECB top dog Jean-Claude Trichet, inflation has been on the rise and the ECB is willing to raise rates to combat this… willing, but not quite ready yet. He added that the rise in inflation should temper and fall below 2% towards the end of the year.

Trichet also mentioned the possibility of an expansion of the European Financial Stability Fund. If you recall, this fund was established to help heavily-indebted countries.

Today, we put Trichet’s statements to the test! The euro zone December CPI report is due and is predicted to print a repeat of the previous month’s reading of 2.2%, just as Trichet said in the press con. Let’s see if the actual results will match his predictions at 10:00 am GMT!

404

Fall seven times, stand up eight! The euro completed its comeback and was basically able to erase its losses from the previous week! Last Friday, EUR/USD managed to add another 22 pips to its already magnificent recovery.

Still riding the good vibes brought about by successful bond auctions and hawkish remarks from the ECB, the euro continued on its northern course up the charts. It also helped the euro’s cause that Friday’s CPI report confirmed ECB President Jean-Claude Trichet’s statements.

Trichet was spot on when he said that inflation was at 2.2% in December, the same rate as that of November. I guess we ought to take to heart whatever the ECB top dog has to say because he clearly knows his stuff!

The week ahead seems like another make-or-break week for the euro. The Ecofin meeting is scheduled to take place tomorrow, and I heard through the grapevine that finance ministers may finally announce “THE solution” to the debt crisis. So sit tight for any news regarding that!

We also have a couple of tier 1 reports to look forward to this week. Due tomorrow at 10:00 am GMT is the January ZEW economic sentiment report, which is anticipated to print a jump from 15.5 to 16.1.

Then we end the week with German IFO business climate data on Friday at 9:00 am GMT. The report is slated to show a slight rise from 109.9 to 110 because of last month’s upbeat manufacturing and services data.

Better-than-expected results in these reports are usually bullish for the currency, so be on the lookout for upside surprises that may extend the euro’s rally.

There you have it, folks! Now go out there and grab some pips!

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Traders don’t seem to be too optimistic about the ongoing Ecofin meetings as they dumped the euro yesterday. EUR/USD fell from its open price of 1.3397 to a low of 1.3245 before closing at 1.3296. Meanwhile, EUR/JPY also took a nasty tumble from its 110.90 open to a low of 109.58.

It looks like the arguments during the Ecofin meetings are heating up as Germany announced that it isn’t willing to support an expansion of the European Financial Stability Fund or EFSF. You see, this fund is supposed to help the region survive another bailout, but it was unable to get the backing of euro zone’s largest economy. It doesn’t help that France, euro zone’s second largest economy, still appears to be undecided on this matter. By the looks of it, the euro zone (as well as the euro) should brace itself for the worst, in case the finance moguls in the Ecofin meetings end up deciding to do nothing about the EFSF.

Today, a couple of top-tier economic reports from the euro zone could take center stage. First is the German ZEW economic sentiment survey, which could print an improvement from 4.3 to 6.5. Later on, euro zone’s version of the report will be released and this could also show an increase from 15.5 to 17.3. Make sure you stay tuned for these releases around 10:00 am GMT.

406

Even though the euro zone finance ministers decided to do nothing after their ECOFIN meeting, the euro was still able to squeeze some gains against its counterparts. EUR/USD reached a high of 1.3466 while EUR/JPY climbed to the 111.00 handle.

It looks like the finance moguls in the euro zone picked option number three, which is to use the classic wait-and-see approach that Forex Gump described in his article about the possible outcome of the ECOFIN meeting. Well, we’ll just have to wait until the political leaders meet up and come up with a decision on how to handle this debt crisis.

What drove the euro higher yesterday was probably the news that Russia may consider buying Spanish debt. Does this make Russia the third country (after China and Japan) to offer a helping hand to the euro zone? The Russian government said the report is a hoax, but their Finance Minister confirmed that they’re willing to buy euro zone’s bailout bonds. So, which is it?

Another factor that boosted the euro’s morale yesterday was the better-than-expected German and euro zone ZEW figures. The reading for Germany soared from 4.3 to 15.4, surpassing the consensus at 6.5. Euro zone’s reading also posted a huge leap from 15.5 to 25.4, higher than the forecast at 17.3.

Today, only the current account balance is on tap for the euro zone. Although this report is slated to have a minimal impact on price action, it’s worth finding out if the actual report shows that the current deficit widened from 9.8 billion EUR to 10.9 billion EUR. If the deficit shrinks instead, it could push the euro even higher, so make sure you stay tuned for the actual figure due 9:00 am GMT.

407

Like a boss, the euro pip-slapped the dollar and ignored all negative vibes yesterday. Now that’s how you keep your pip-hand strong! Although the current account report turned up worse than expected and ECB member Stark had a few bearish things to say, the euro forged its way to a new one-month high against the dollar. After hanging above 1.3500 for a while, EUR/USD settled at 1.3472 to record an 88-pip rise.

Still in a frenzy from the previous day’s bull run, the markets practically ignored the news that the euro zone’s current account deficit grew larger than expected. The deficit widened from 9.6 billion EUR to 11.2 billion EUR, exceeding forecasts by 1 billion EUR.

ECB member Stark took a bit of wind out of the euro’s sails when he suggested that the issuance of eurobonds isn’t a sure thing. If you recall, the EFSF was planning to issue eurobonds to help raise funds for Ireland’s bailout. But according to Stark, who I shall now refer to as “Party Pooper,” the bonds won’t do anything to solve Europe’s problems and are actually not even compatible with the euro treaty! Without the eurobond issuance to look forward to, the euro drop could resume.

Let’s see if today’s releases can breathe more life into the bull run.

The German producer price index is slated to print higher, from 0.2% in November to 0.5% in December. Given Trichet’s recent words about rising inflation in the euro zone, we shouldn’t be surprised to see a strong figure in this report.

After that we take a look at the ECB monthly bulletin, which is composed of statistical data that the ECB used when it made its latest interest rate decision. Basically, this gives us a better understanding of exactly why the ECB decided to hold rates steady. Get it fresh off the press at 9:00 am GMT!

408

Action on EUR/USD yesterday was as intense as Steven Tyler on American Idol. The pair bounced back and forth between the 1.3400 and 1.3500 psychological handles all throughout the day. In the end, it was only 2 pips higher at 1.474 from its opening price.

As I said yesterday, the only economic report we had from the euro zone was the German PPI for December. The pair rallied at the wake of the release but it seems like the 0.7% uptick in inflation that overshot the market’s forecast by 0.2%, wasn’t enough to take away traders’ attention from the developments in Ireland and Portugal.

Word got out that Irish Prime Minister Cowen has hollered for an election in March. Economic gurus say that this didn’t sit well with investors because there’s a good chance for the ruling party to lose and cause more complications about how Ireland would go about repaying its debt.

Then there was Portugal which was threatened by Moody’s with a credit downgrade. Yikes! It also has Spain balance sheets under review but it has yet to comment on it. So that’s definitely something you have to watch out for!

Also, make sure you’re on your toes for the German IFO Business Climate index later at 9:00 am GMT as this could affect the euro’s performance on the charts. Note that analysts have predicted that economic conditions remained steady during the month with the forecast just matching its previous reading of 109.9.

This is the only top-tier event we have on our economic calendar for the euro so make sure you don’t miss it! Good luck and happy trading!

409

When will the Balance sheets for Spain be released?

410

Just like Blake Griffin of the L.A. Clippers, the euro wowed traders again on Friday as it closed at its 8-week high against the dollar at 1.3614, stacking up its gains to a total of 218 pips for the week. Against the yen, it was able to dunk 57 pips and end the week at 112.41.

What got the euro bulls hustlin’ up the charts, you ask?

Well, the German IfO report for January apparently was enough Piptorade for the euro in Friday’s trading. It showed that business confidence in the country rose to a new record high when the index printed at 110.3 versus the 110.0 consensus. Hollah! Economic gurus see this as evidence that debt woes of the peripheral countries have done very little to dampen Germany’s swagger!

The assessment for current conditions showed that Germans aren’t so gung ho about the economy with the index falling short of the 113.2 prediction when it came in at 112.8. However, the expectations component of the report clocked in at 107.8, topped the 106.5 forecast, and implied that businessmen seem to be excited about the economy in the near future.

Watch out for Germany’s PMI reports today and see if they support the initial data. At 8:30 am GMT, the market is expecting to see the services PMI for January to come in at 59.0 while the country’s manufacturing PMI is projected at 60.9.

However, thirty minutes before that at 8:00 am GMT, France will take the spotlight as it releases its own version of the reports. Manufacturing activity is anticipated to have slowed a little bit during the month, with the PMI seen at 56.6 following December’s 57.2 reading. On the other hand, service sector activity is predicted to have improved from its 54.9 figure in December to 55.2 in January.

Then at 9:00 am GMT, we’ll get the PMI reports for the entire region. Overall, euro zone’s manufacturing PMI for January is projected to match its 57.1 reading in December while a 0.1-point decrease is expected for its services PMI with the forecast at 54.1.

Lastly, we have the industrial orders report for November on tap at 10:00 am GMT. Analysts have bet their two cents that orders placed with manufacturers during the month increased by 2.4%.

Better-than-expected figures may just send EUR/USD to 1.3800 while worse-than-expected ones could push it back down to 1.3500. So make sure you don’t snooze on these reports later!

411

Mixed reviews? No problem! The euro was able to extend its gains against the dollar for another day even though economic data released yesterday weren’t completely optimistic. EUR/USD surged 34 pips higher to close at 1.3645, forging a new two-month high.

Let’s start with the not-so-good news! Yesterday, we learned that the euro zone’s manufacturing sector didn’t perform too well in January, causing the manufacturing PMI to tick down from 57.1 to 56.9. Apparently, two of the largest economies in the region, France and Germany, experienced similar growth slowdowns, and probably dragged down the region as a whole.

Industrial new orders growth also failed to meet expectations. A 2.3% rise was expected to follow up October’s 1.4% growth, but instead, November printed a 2.1% rise.

Now onto the positive end of the spectrum! The services PMI rose from 54.2 to 55.2, indicating that growth is picking up in the euro zone.

In total, it could be said that the good outweighed the bad. After all, the composite PMI, ticked higher, from 55.5 to 56.3 in January, surpassing forecasts for just 56.3.

The fact that rumors are beginning to spread about the possibility of an ECB rate hike also helped provide support for the euro.

More tier 2 reports coming our way today!

At 7:00 am GMT, the latest GfK German consumer climate report will be released. By now, you probably know how important Germany is to the euro zone, being the largest economy in the region. So keep an eye out for this release. According to forecasts, the index will likely post a rise from 5.4 to 5.5 for the month of January.

Then at 7:45 am GMT, France will release consumer spending data. Tune in to see if the 2.8% growth we saw in November will weaken to just 0.4% in December as analysts have forecasted.