Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
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What a letdown! Despite the amount of data releases from euro zone, the euro’s movement was as directionless as a man shopping in Bloomingdales. Hah! EUR/USD bounced around a tight 50-pip range yesterday before closing at 1.3677, a mere 28 pips lower from its opening price.

In any case, let’s do a quick rundown of the data. The French manufacturing PMI showed a reading of 55.3 versus the 55.0 figure initially predicted. Meanwhile, the French the services PMI beat expectations with a reading of 60.8.

On the other hand, the German manufacturing PMI was at 62.6, higher than the 60.3 figure expected, and the services PMI fell to 59.5, which was lower than forecast.

And finally, the German IFO business climate survey printed 111.2, which was a significant improvement from the 110.3 figure seen the month before. This means that businesses in Germany became more optimistic about the economy.

While the data did little to move EUR/USD, economists are saying that the better-than-expected results could give the European Central Bank (ECB) enough reason to hike interest rates. Hah, I don’t know about that… When some of euro zone’s member nations are still struggling to pay off their debts, raising rates is probably not the ECB’s top priority. Ahhh, but I guess we’ll just have to all wait and see what the ECB has to say in its next interest rate announcement.

Today we’ll be treated to another round of sentiment surveys. At 7:00 am GMT, the Gfk German consumer climate survey will be released. It is expected to tick higher to 5.8 from 5.7 previously. Then, at 2:00 am GMT, the Belgium NBB business climate survey will follow. The survey is predicted to show a reading of 4.6, up from 4.5.

Alright, that’s it for today forex kiddos. Let’s see if EUR/USD is able to bust out of its consolidation today!

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You know how EUR/USD’s price action looked like yesterday? A “U” that’s how! EUR/USD moved in two distinct halves yesterday, falling sharply during the Asian session but strongly rallying once the European trading session rolled along to recuperate its losses. At the end of the day, EUR/USD was at 1.3653, just 24 pips lower from its opening price.

The pair’s drop early on was mostly due to risk aversion from the violence in Libya, the earthquake in New Zealand, and Moody’s downgrade of Japan’s debt outlook to negative. Remember, whenever uncertainty hits the markets, investors tend to put their money into the safest investments. In this case, they rally back to the world’s reserve currency, the U.S. dollar.

The rally that came after, however, was a euro move than a dollar one. ECB council member Yves Mersch expressed concern that inflation could get out of hand, which gave investors reason to believe that the bank could alter its stance on interest rates in their announcement next week.

There isn’t much on euro zone’s economic calendar today as only the Industrial New Orders report is due. Scheduled to come out at 10:00 am GMT, the report is expected to show a decline of 1% in orders, opposite the 2.1% increase seen the month before.

That’s it for today! Good luck trading!

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Score one for the euro! It was finally able to record its first win of the week as speculation that the ECB may raise rates breathed new life into the bull run. EUR/USD rose 94 pips and finished at 1.3747 while EUR/JPY climbed 41 pips and ended at 113.41.

Markets are buzzing about the possibility that the ECB may hike rates soon. Several ECB officials, including Trichet, have already spoken up about their concern over inflation in the euro zone. The fact that these guys are beginning to speak hawkish has got many believing it might not be long before the central bank tightens up.

As for yesterday’s data, industrial new orders surged 2.1% in December, doing well to outperform expectations of a 0.8% decline. As it turns out, heavy transport equipment had a lot to do with this spike up as it contributed a growth of 0.8%.

Today, we’ll revisit German GDP data. The final stats for Q4 are due at 7:00 am GMT, and forecasts are for growth to stay put at 0.4%. Since Germany is the euro zone’s largest economy, look for the markets to react to any revisions to this figure.

Also on tap, the Italian retail sales report. Survey says that December probably experienced a 0.2% rise in sales after November recorded a 0.3% decrease. It’ll be interesting to see if the harsh December weather took its toll on retail sales in Italy as well. Tune in at 9:00 am GMT to see for yourself!

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Traders continued to swarm all over the euro yesterday like bees as it extended its gains against the dollar. After EUR/USD bottomed at 1.3704, it traded higher and ended the day at the 1.3800 handle.

ECB member Axel Weber’s comments yesterday might have been like honey to traders. In a conference in Zurich, he said that “interest rates can only go north.” With that, he got bulls buzzin’ as he hinted a more hawkish tone from the ECB when it announces its interest rate decision next week.

Take note that ECB members Mersch and Bini-Smaghi have also hinted that they’re rooting for a tighter monetary policy in response increasing inflation pressures brought about by rising commodity prices.

I wonder if the euro will be able to hold on to its gains today. Note that although it won against the dollar, it gave up pips to the yen. Yikes! Perhaps the shared currency will have to impress markets on the economic front.

According to our economic calendar, Germany will release its CPI report for February at 12:00 am GMT. A figure higher than the 0.5% consensus will probably be bullish for the euro as this would give the ECB one more reason to consider hiking rates.

Then at 7:45 am GMT we’ll have the French consumer spending report for January. However, it looks like economic gurus don’t have their hopes up for the report with the forecast at -0.7% following its 0.6% growth in December.

Aside from that, make sure you also gauge market sentiment. Good luck y’all! Peace!

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Despite positive economic reports, the euro still gave up 48 pips to the dollar during Friday’s trading when it closed at 1.3753. Boo! But it wasn’t all that bad. EUR/USD was still up 49 pips for the entire week.

On Friday we saw that French consumer spending only fell by 0.5% in January. This might have allowed investors to breathe a sigh of relief since expectations were for a 0.7% contraction. On the other hand, the M3 monetary supply report only printed a 1.5% uptick for the same month which fell short of the 2.1% figure that analysts were eyeing.

Lastly, Germany’s CPI report showed that inflation pressures increased in February when it came in as expected at 0.5% and erased the 0.4% decline it printed in January.

Hmmm, I wonder if the euro zone’s January CPI report will also be bullish for the shared currency when it is released later at 10:00 am GMT.

If you’re planning to go long on the euro, keep your fingers crossed for the headline figure to come in higher than the predicted 2.4% uptick and the core reading to show a bigger uptick than 1.2%. Remember that members of the ECB have grown more hawkish during the past week.

And so, evidence of increased inflationary pressures may give the ECB more reason to sound more hawkish in its statement on Thursday. I think my buddy Forex Gump wrote about this in his blog this weekend. Give it a read to better prepare for the much anticipated interest rate decision!

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Judging by the way traders bought up the euro yesterday, it seems they’re all convinced it’s only a matter of time before the ECB hikes rates again. In spite of mixed inflation feedback, EUR/USD managed to rise 43 pips to 1.3800! A good way to close the month, but can the euro sustain these gains in March?

Yesterday, we learned that German import prices rose 1.5% in January, which is 0.4% higher than forecasted. However, this figure is much softer than December’s 2.3% rise. Could inflationary pressures be subsiding in the euro zone? Perhaps the euro’s strength in January had something to do with this downtick.

Likewise, CPI inched lower in January, posting a 2.3% increase and undershooting forecasts for a repeat of December’s 2.4% rise. It’ll be interesting to see if these figures will change ECB members’ recent hawkish tones when they make their rate statement on Thursday.

For now, let’s focus on euro zone employment data.

At 8:55 am GMT, we have German unemployment change data coming out. Survey says that unemployment will probably remain at an 18-year low, one of the reasons why Germany has been faring better than most European countries. Expect to see a repeat of December’s decrease of 13,000 in this report.

As a whole, the region’s unemployment rate should remain at 10.0%. But just in case it doesn’t, be sure to tune in at 10:00 am GMT to catch the release.

Also, it looks like we’ll receive another piece to the CPI puzzle when the CPI flash estimate for the month of February comes out at 10:00 am GMT. This report has CPI ticking up from 2.3% to 2.4%. Did prices rebound last month or are we seeing the beginning of a downtrend in inflation? Hmm… I guess there’s only one way to find out!

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Bears tried to be chill while waiting for a chance to pounce but the euro was so hot that they melted! EUR/USD ended yesterday’s trading 95 pips higher from its opening price while EUR/JPY closed at 113.55 after opening at 112.81.

So what made the euro hotter than Cyclopip’s amrpits on the fourth of July? Ha! Just kidding bud!

Well, it was none other than the PPI report for January which wowed traders when it came in at 1.5% and topped the 1.1% forecast. On a yearly basis, producer prices are up 6.1% reflecting the higher cost of commodities.

Some economic gurus think that perhaps this increase will also be reflected in CPI reports soon. Given the strength of the German labor market, they’re saying that businesses could be more confident in passing on additional costs to consumers.

But the ECB ain’t too happy about this idea. Remember that the central bank’s mandate is to maintain price stability. In other words, they want inflation to be kept on the down low. This is why a handful of traders are expecting an interest rate hike from the bank soon. So make sure you keep an ear out for the ECB interest rate decision later at 12:45 pm GMT!

Interest rates are expected to remain steady at 1.00% but what you have to tune into is the bank’s accompanying statement which is scheduled a little later at 1:30 pm GMT. If ECB President Trichet’s reaction to higher inflation readings sounds hawkish to traders, we may just see the euro extend its gains against its counterparts!

Before Jean-Claude takes on the stage though, Germany will release its retail sales figures for January at 7:00 am GMT. Analysts are expecting to see that consumer spending was up 0.5% during the month after declining by -0.3% in December. Following that, at 9:00 am GMT, the euro zone’s final services PMI is anticipated to show no revisions from the flash version at 57.2.

We’ll also have euro zone’s retail sales and revised GDP reports at 10:00 am GMT. Analysts are expecting to see that Europeans went back to their shophaholic ways in January with the retail sales forecast up at 0.4% after contracting by 0.6% in December.

Meanwhile, the GDP report is anticipated to show that the euro zone economy grew by 0.3% in the fourth quarter of 2010.

Whew! It looks like we have our economic cupboard full for the euro today. Be careful, ayt?

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All Jean Claude Trichet did was open his mouth and bada bing, bada boom, the euro shot up the charts like a raging bull! Thanks to some rather optimistic words by the ECB President, the euro trampled all over its counterparts and became king of the forex jungle yesterday. EUR/USD closed 94 pips higher to end at 1.3960, while EUR/JPY finished at 114.98, good for a 143 pip gain on the day.

So what exactly did Trichet say to send the markets on a frenzy?

Oh nothing… just that the ECB could implement a rate hike as soon as NEXT month. And of course, this was all that was needed to give the euro a boost. The markets had actually anticipated a more hawkish tone, but seeing as how the euro reacted to the statement, I don’t think anyone thought Trichet would be THAT hawkish.

In addition to signaling a potential interest rate hike next month, the ECB also upgraded its inflation and GDP forecasts for 2011. The bank expects inflation and GDP to be between 2.0-% - 2.6% and 1.3% - 2.1% respectively, up from initial forecasts last December of 1.3% to 2.3% and 0.7% to 2.1%. With these figures, its no surprise that the ECB feels that the euro zone will be strong enough to withstand a rate hike so soon.

In other news, we got some good news when retail sales data was released. While euro zone wide retail sales grew in line with forecasts at 0.4%, German sales experienced growth of 1.4%, nearly 3 times the expected figure! In addition, last December’s figure of -0.3% was revised up to 0.3%! Boo yeah baby!

Meanwhile, no revisions were made to the latest GDP report, which showed quarterly growth of 0.3% in the euro zone.

For today, no hardcore data will be released, but do know that today will be the start of the EU Economic Summit. Leaders from EU nations will be meeting on how to address the current debt crisis and possibly lay down contingency plans for the future. Who knows what will be said and what developments will come out from this meeting.

That’s it for this week, I hope y’all enjoy the weekend. Peace out homies!

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And euro bulls blew the bears out the water once again! For the third straight day, EUR/USD managed to post a new yearly high last Friday! The pair closed the week at 1.3972, more than 200 pips higher from its week open price.

As I keep saying, the reason behind the euro’s rallies in the past couple of days is increased interest rate hike speculation. According to the European Central Bank (ECB), an interest rate hike next month is a possibility since inflation is starting to pick up.

The market also grew more optimistic about global recovery when the U.S. employment report showed that joblessness fell to 8.9% in February from 9.0% in January.

This week, the economic calendar presents only one high impact report - the German Harmonised Index of Consumer Prices (HCIP). The HCIP, which is Germany’s primary measure of inflation, is scheduled to come out at 7:00 am GMT.

It’ll be interesting to see whether the HCIP will be able to go above last month’s 0.6% figure. With the ECB going all hawkish, improved HCIP readings could strengthen the ECB’s case for an interest rate hike next month.

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“Abort Mission 1.4000, abort!” The euro was still unable to successfully trade past the major psychological handle yesterday, as EUR/USD slipped from its 4-month high at 1.4037 and closed 12 pips lower from its opening price at 1.3972.

On the economic front, we only had the Sentix investor confidence index for March which came in at 17.1 and beat the forecast at 16.8. Hmmm, that should have been bullish for the euro as it meant investors and analysts remain optimistic on the euro zone.

So what forced the euro to retreat from its advances? Two words: sovereign debt.

Yeah, you read that right. Ghosts of past debt came back to haunt the shared currency. Yesterday Moody’s downgraded Greece’s credit rating by three notches from Ba1 to B1. The hotshot credit rating agency said that it is skeptical about the country’s capacity to carry out its fiscal consolidation plan.

And not only that! From what I’ve heard, spreads on Irish and Portuguese bonds have also been trading at their highs. Yikes!

You have to admit though, the euro deserves props for being able to stay above 1.3950 despite all the negative vibes. I guess traders are really looking forward to an interest rate hike from the ECB soon. ECB President Jean-Claude Trichet might have also given the euro bulls some ammo when he reiterated his focus on inflation in his speech yesterday. Too bad it wasn’t enough for the euro to end the day with a win. Boo!

Having said all this, make sure you keep an ear out for updates on Europe’s sovereign crisis. Economic gurus warn that markets could shrug off the possibility of a rate hike if debt issues continue to stack up.

You may also want to tune in to a couple of reports we have from the euro zone today.

First up at 7:45 am GMT is the French trade balance data for January. The country’s trade deficit is expected to have narrowed to 4.9 billion EUR during the month, after imports outpaced exports by 5.1 billion EUR in December.

Then at 11:00 am GMT we have the German factory orders for January. Watch out for a figure better than the 2.6% uptick that analysts have predicted as this will probably boost the euro in today’s trading.

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Eenie meenie miney mo, who’s the weakest of them all? Despite bearish reports from the Euro Zone, the euro managed to print mixed results against its pip counterparts yesterday. EUR/JPY ended the day almost unchanged at 114.91, but EUR/CHF gained by 60 pips at 1.3002. Meanwhile, EUR/USD suffered a 74-pip drop after plunging to an intraday low of 1.3862.

Report from Germany released yesterday showed that factory orders for the country rose by 2.9% in January after dipping by 3.6% in December on a surge in domestic demand. Too bad France’s trade balance report also revealed a wider trade deficit at 5.9 billion EUR!

As interesting as these reports are though, the markets’ eyes and ears are tuned in to the upcoming meeting of the Euro Zone countries as they try to form a “comprehensive package” that would hopefully address the region’s debt problems. The meeting will take place on March 11, and if the leaders fail to reach concrete decisions, then we just might see the euro fall to pip deeps!

While we wait for the meeting on the 11th, you might want to check out the German industrial production report today at 11:00 am GMT. Markets are expecting a 1.8% rise in January after a 1.5% dip in December, so keep your eyes peeled for this one! A higher number means that the German economy is still going strong, so we might see the euro find some support!

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The euro’s price action yesterday was as mixed as Big Pippin’s brands of hair spray as varied economic reports from the region sent traders sprinting to both the bull and bear camps. While EUR/USD managed to end the day almost unchanged at 1.3903, EUR/CHF fell by 74 pips to 1.2928. Meanwhile, EUR/JPY inched up by 8 pips to 114.99.

Germany’s industrial production report energized the bulls yesterday when it printed a 1.8% rise in January after declining by 0.6% in December. As the euro zone’s largest economy, any positive report from Germany is good news for the euro.

Meanwhile, the euro bears were partying on the other side of the pip streets when they heard that Portugal’s bond auction failed bring enough investor lovin’. Portugal managed to raise 1 billion EUR worth of bonds, but it cost them a yield of 5.99%, a whole lot more than the 4.08% yields last September. This signaled that investors aren’t as confident about the Portuguese economy, so the euro took a tumble against its major counterparts.

Maybe today’s economic data can bring back the pip love to the euro. At 7:00 am GMT we’ll see the German trade balance report. Since Germany’s industrial production data exceeded expectations yesterday, market geeks also expect positive figures for Germany’s trade figures.

Then at 7:45 am GMT news traders will get hold of France’s industrial production report. Markets expect the data to gain by 0.6% in January after its 0.3% rise in December, but keep an eye out for any big surprises!

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Whenever the risk aversion tune comes up, bears make the euro drop fast and tap a low. After opening at 1.3904, EUR/USD plunged all the way to it’s 6-day low at 1.3775 before closing at 1.3790.

Investors had a whole lot of bad vibes to deal with yesterday. You know what, I actually think that the euro was still lucky that it didn’t lose as much to the yen and the Swissy!

First there was Spain’s credit rating downgrade from Moody’s which surprised everyone like lightning out of a clear blue sky. Duhn, duhn, duhnnn!

The credit rating agency cut Spain’s debt grade by one notch to Aa2. Some Spanish officials were really upset about it, but the hotshots at Moody’s say that the country’s restructuring costs may cost more than what is estimated, and that its budget deficit targets are too ambitious.

I bet this news alone was enough to send chills down investors’ spine. I mean, it’s no secret that the EU (literally) can’t afford to bailout the bloc’s fourth largest economy if it defaults on its debt. Then to make things even worse, China and the U.S. reported weaker than expected figures that fueled risk aversion even further.

As for the euro zone, yesterday’s roster of economic reports was mixed. While France’s industrial production for January came in 0.4% higher than what was expected at 1.0%, Germany’s trade balance fell short of expectations by almost 2 billion EUR at 11.8 billion EUR.

The ECB Bulletin for February seemed hawkish enough, stating that “strong vigilance” is needed to fight off inflation. However, the bad vibes from Spain’s downgrade might have been too much for investors handle and they just shrugged off the possibility of an interest rate hike.

Economic gurus are now keeping tabs on the EU Economic Summit that will take place in Brussels today, and so should you! They’re saying that if EZ leaders can’t reach an agreement on how to rescue debt-ridden nations, the euro may continue its slide down the charts. Be on your toes for comments from officials after the Summit, ayt? Good luck!

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The euro sure knows how to end the week with a bang! After dipping to intraday lows last Friday, the common currency rebounded strongly against its major pip buddies (except the yen) and ended the day in the green. EUR/USD closed 114 pips higher at 1.3903 and EUR/CHF rebounded to its 1.2920 closing price after plunging to a low of 1.2826. Meanwhile, EUR/GBP ended the day at its open price.

The euro bulls got a big dose of adrenaline rush last Friday when bullish reports started coming out of the Euro Zone. Aside from some ECB members reaffirming their hawkish comments, it also looks like Germany’s Angela Merkel is more willing to cooperate on the region’s European Financial Stability Fund. In fact, in the EU economic summit last weekend, Merkel not only showed support for lower interest rates for Greece and Ireland, but also a larger EFSF fund! Boo yeah!

Were Germany’s better-than-expected reports the reason why Merkel was such in a good mood? Germany’s wholesale price index rose by another 1.4% in February when markets were only expecting 1.0% growth. Meanwhile, its final CPI figure remained at 0.5%.

Let’s see if the euro bulls sustain their game this week with the parade of economic reports hitting the region. Today at 10:00 am GMT we’ll get hold of the industrial production report for January, followed by Deutsche Bundesbank President Axel Weber’s speech in Berlin at 12:00 pm GMT.

Tomorrow we’ll see the reactions of Germany’s investors to rising prices and other economic events when the big German ZEW survey is released at 10:00 am GMT. Then on Wednesday the CPI data for February will be out, and a number higher than the expected 2.4% might convince more ECB members to raise their interest rates.

Lastly, catch the German producer price index at 7:00 am GMT and the region’s current account at 9:00 am GMT on Friday to see if the euro can manage to end another green candle at the end of the week.

Good luck in your trades!

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The euro’s price action was as mixed as Huck’s Nutty Mocha Latte yesterday when a worse-than-expected economic report wrestled with positive political news from the Euro Zone leaders. EUR/USD logged another 25 pips to its gains at 1.3992, and EUR/JPY inched up by 17 pips at 114.22. On the other side of the charts EUR/CHF dropped to 1.2935 while EUR/GBP fell to .8652.

The region’s industrial production report might have limited the euro’s gains as it only stagnated to a 0.3% growth in January when analysts were expecting a 0.4% rise.

Good thing that Euro Zone leaders took center stage yesterday! Market participants were surprised when EU leaders agreed to increase the size of the EFSF to 440 billion and to allow bond purchases from individual countries. You see, a larger fund might be used to help more troubled economies, while direct bond purchases from individual countries would make it easier for troubled euro zone economies to raise money. Actually, given the reputation of EZ leaders with these kinds of meetings, I have a feeling that they got brownie points just by reaching a decision!

Aside from the ECOFIN meeting scheduled for the whole day today, my forex brothas will be watching the German ZEW economic sentiment report coming out at 10:00 am GMT. The index clocked in at 15.7 last February, and markets are now pegging March’s figure at 16.2 Will the report disappoint? Don’t even think of missing this one!

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What did the euro have for breakfast?! Despite a strong wave of risk aversion that sank other higher yielding currencies against the dollar, EUR/USD remained steady. After opening at 1.3992 and dipping to an intraday low at 1.3855, EUR/USD recovered and rose up the charts to close at 1.3998. What a comeback!

The strong run was somewhat surprising, given both the risk aversion we saw in the markets and the poor results of the ZEW reports. The German and euro zone ZEW economic sentiment reports printed at 14.1 and 31.0 respectively, after it was expected that they would come in at 16.2 and 34.5. This indicates that investors and analysts are still cautious over the future of Germany and the euro zone as a whole.

We could be in for another doozy today, as inflation data will be released in the form of the year-on-year EZ CPI report coming in at 10:00 am GMT. Expectations are that inflation will be at 2.4%, still above the ECB’s target of 2.0%.

Take note that over the past couple of months, traders have bought up the euro, pricing in a potential rate hike by the ECB to help counter the strong rise of inflation in the euro zone. If the report shows that inflation rose more than expected over the past month, it could spark another bullish run for the euro.

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Wapack! Thanks to yet another credit downgrade as well as overall risk aversion in the markets, EUR/USD found itself on the losing end of the forex trading stick yesterday. After finding tough resistance at the 1.4000 level, EUR/USD dropped over 100 pips before finally closing at 1.3899.

A couple of weeks after downgrading Spain, Moody’s decided to complete its tour of the Iberian Peninsula by downgrading Portuguese debt yesterday. The ratings agency cut Portugal’s rating by two notches, bringing it down from A3 to A1. This shouldn’t come as too much as a surprise – many were already concerned about Portugal’s debt situation and it was only a matter of time before it was “’officially” downgraded.

With the markets focused on the downgrade and the ongoing nuclear crisis in Japan, traders seemed to ignore the inflation data that was released yesterday. Year-on-year inflation came in as expected, printing at 2.4%, while the core report, which does not include energy and food in its index, came in slightly below forecasts at 1.0%.

This marked the third consecutive month that inflation came in higher than the ECB’s target rate of 2.0%. This gives the ECB more incentive to raise rates in the coming month. Now I ain’t too sure if or when the ECB will actually raise rates (if I knew, I’d be mad rich and flaunting it!), but be on the lookout whenever an ECB official is scheduled to talk; he might just drop a hint or two about the ECB’s stance toward interest rates!

No biggies on the docket today, but make sure you keep an eye out on Japan. With all the uncertainty in the market, risk aversion is clearly the major market driver right now. If more bad news comes out, we could see the euro drop further down the charts.

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Whew! It was a long and hard day for the euro yesterday as it battled its major counterparts in the charts. It finally ended the day unchanged against the yen, 123 pips higher against the Greenback, and 22 pips lower against the franc. Talk about mixed price action!

Though no economic reports were released from the Euro Zone yesterday, euro traders got busy when they found out that Spain’s bond auctions turned out better than expected. Spain sold a total of 4.1 billion EUR of government bonds, which is better than February’s numbers.

Too bad Germany rained on the euro’s parade though, when its parliament approved a motion that aims to prevent the EFSF from directly buying bonds of Euro zone economies in trouble. If approved, the euro zone’s financially troubled economies would have a harder time raising money and paying their debts. Ack!

And speaking of Germany, the country is slated to show its producer price index report today at 7:00 am GMT. While investors expect a lower growth of 0.7% in February from its 1.2% rise in January, a higher figure might push the euro further up the charts.

Also scheduled for a spotlight today is the euro zone’s current account report at 9:00 am GMT. The data clocked in a 13.3 billion EUR account deficit in December, but market geeks are only expecting a 10.6 billion EUR deficit in January.

Happy Friday, kids!

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Y’all can’t touch this! The euro was simply untouchable last Friday as it came out ahead of most of its major counterparts last Friday. EUR/USD gave bulls something to smile about as it climbed 160 pips and finished at 1.4182 to post a new 4-month high.

Data last Friday did little to stop the bull run. In fact, it might have even egged the bulls on!

German PPI ticked up another 0.7% last month, just as forecasts had expected. Also, the current account report came in better than expected, showing a deficit of just 0.7 billion EUR instead of the forecasted deficit of 10.6 billion EUR.

The only downer was that the euro zone’s trade balance posted a wider deficit of 3.3 billion EUR, which is worse than the expected 2.0 billion EUR deficit.

In other news, y’all should give ECB President Jean-Claude Trichet some props! Why? Because in spite of that little trade balance bummer, he remained hawkish in his speech last Friday! Judging by the Trichet’s words, it seems like the central bank is still on track to raise interest rates in the near future. Boo yeah!

Today, we won’t have any data comin’ out from the euro zone. I guess everyone’s gonna be busy with the ECOFIN meetings today!

But don’t fret! You’ll still get your report fix this week… You’ll just have to wait a few days! The region’s got a bunch of PMI reports due on Thursday and German consumer and business climate data due on Friday. But for now, keep an eye out for risk sentiment. Good luck out there, folks!

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Just like the top box office hit last weekend, the euro’s gains seemed Limitless as it posted more gains against its major counterparts. EUR/USD rose for the third day in a row to 1.4226 and EUR/CHF climbed by another 96 pips to 1.2865. Meanwhile, EUR/JPY inched up by 43 pips to 115.36.

No economic report was released from the region yesterday, but European Central Bank President Trichet gave a speech around the time of the ECOFIN meetings. Too bad it turned out to be a snoozer though, as he only repeated his sentiments on the central bank’s interest rate hikes. In any case, his extended hawkishness gave the euro some traction, and even canceled out the effects of the news that many euro zone members believe that Portugal will soon ask for a bailout. Whew!

Economic boards in the euro zone will be empty again today, but that doesn’t mean you should slack off from your screens and play CoD: Black Ops! If tensions in the Middle East continue to escalate over the next couple of hours, then we might see another round of risk aversion in markets.

Stay sharp in your trades!