Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
493

“I may have been losing in the last couple of days, but I’m not out yet,” cried the euro bulls yesterday as they marked their second day of gain yesterday. Despite a weak ZEW economic sentiment survey, EUR/USD was able to close the U.S. trading session at 1.4223, almost 60 pips higher from its opening price during the Asian session.

The ZEW economic survey printed a reading of 13.6, significantly lower than the 17.9 figure initially predicted and the previous month’s 19.7. It seems that the euro’s fall is severely overdone and forex market participants are starting to take profit. With all the bad news already priced in, it looks like EUR/USD is in retracement mode.

Nothing is coming out from the euro zone today, so don’t expect any wild moves from EUR/USD today. Keep a close eye on those major support and resistance levels, as they will likely hold!

494

While EUR/USD didn’t budge an inch, the euro bulls made sure they took advantage of the weaker yen. EUR/USD stayed within a tight range of just 90 pips, closing just 13 pips higher at 1.4236. Meanwhile, EUR/JPY continued its trek up the charts, rising another 51 pips to 116.25.

While no economic data was released from the euro zone, we did get a ton of comments from ECB and euro zone officials. For the most part, each of the officials pinpointed the growing divide in the euro zone, with some countries (Germany, France) doing well, while others (PIIGS) not as good. Some feel that the debt problems of Greece, Ireland, and Portugal are just isolated incidents, and that other countries no longer need any stimulus measures.

In any case, I suspect that debt concerns and interest rates will continue to dominate the euro zone landscape. If word comes out that Greece may need restructuring, it could weigh down the euro. On the other hand, rising inflation could spark speculation that the ECB may raise rates, which could give the euro some nice support.

Once again, we’ve got an empty economic cupboard, so we may not see big moves on euro pairs. Still, keep an ear out for any news about Greece, as it could spark some movement in the forex markets.

495

It’s on! Just like the Miami Heat did in their game against the Chicago Bulls, the euro showed the Greenback that it’s got game. Even without the support of euro zone data, the pair was able to rally and close 71 pips higher for the day.

Actually, the euro might have been able to post bigger gains if it didn’t have Greek debt problems weighing it down. So then why did the euro rally? One possible explanation is the bad U.S. data we saw yesterday.

But as for the euro zone’s economic situation, I’m inclined to believe its more euro bearish than bullish. With Greece’s debt restructuring issues still unresolved, it’s difficult to see the euro climbing up the charts in the long run.

Today, we have the German PPI to look forward to at 6:00 am GMT. Look for Germany to post a slight rise from 0.4% to 0.6%. Seeing as inflation has been a hot topic in the euro zone in the past couple of months, don’t be surprised to see a mini rally if this prints above expectations.

A couple hours after that, the euro zone will be revealing March’s current account balance. Analysts say its deficit probably shrank from 7.2 billion EUR to 5.7 billion EUR. Can the euro zone deliver an upside surprise and give its currency a boost? You’ll just have to wait ‘til 8:00 am GMT to find out, playas!

And of course, remember to keep your eyes and ears open for any developments regarding Greece!

496

While the Batman team was busy hyping up Bane from “The Dark Knight Rises,” the market was busy watching “The Weak Euro Falling.” Okay, maybe it wasn’t as cool as Tom Hardy on a poster, but it was definitely more interesting! For one, EUR/USD dropped by a whopping 154 pips to 1.4156, while EUR/JPY also slipped by 104 pips to 115.63.

Just when euro bulls thought they could close up shop and have an early weekend, Greece’s debt restructuring issue took the wind out of their sails! Last Friday credit ratings agency Fitch downgraded Greece’s sovereign debt rating 3 notches down from BB+ to B+, with threats of more downgrades to come if the euro zone officials don’t get their act together soon. Yikes! If you’ve been reading Forex Gump’s economic blogs, you’ll know that Greece is in hot water over the expiration of its bailout package.

Too bad that good economic data didn’t wave red capes for the euro bulls. Last Friday we saw that Germany’s PPI inched higher by 1.0% in April after growing by 0.4% in March, while the euro block’s current account deficit shrank from -6.5 billion EUR to -4.7 billion EUR in March. Lastly, the region’s consumer confidence data in April improved from -12 to only a -10 pessimistic reading.

Today we’ll see if the euro can keep chugging out better-than-expected reports when a parade of PMIs is scheduled for release. At 7:00 am GMT we’ll see the French manufacturing and services PMI, followed by the Germany manufacturing and services PMI at 7:30 am GMT. Last to come out is the whole region’s manufacturing and services PMI data at 8:00 am GMT. Most of these reports have higher expectations than their previous readings, so be sure to manage your positions wisely!

497

Whoa! Like a house of cards, the euro’s pips came crashing down in yesterday’s trading. It lost to all of its counterparts, giving up 79 pips to the dollar when EUR/USD closed at 1.4048. Meanwhile, EUR/JPY tumbled 166 pips from its opening price to its intraday low at 113.87.

With all the bad news we heard from the euro zone yesterday, I would actually be surprised if bears didn’t pounce on the currency.

First there was the result of the Spanish elections which reflected the opposition party’s growing popularity. The continued protests against the current government and its planned austerity measures must’ve sent jitters to investors.

Then Standard and Poor revised its outlook for Italy from stable to negative. Yikes! Fitch also joined in the fun when it downgraded its credit outlook for Belgium. From what I’ve heard, a few naysayers are taking the downgrades as a sign that Greece’s problems might have already spread to other countries.

To make things even worse, yesterday’s roster of economic data failed to impress the market.

Save for the French Services PMI for May, which came in at 62.8 and topped the 62.2 forecast, all other PMI reports for May fell short of expectations.

France’s manufacturing PMI printed two points lower than what was expected at 55.0. Germany’s version of the report also showed that manufacturing activity was slower than what was anticipated at 58.2 versus the 61.2 consensus. Its services sector also didn’t grow as fast as analysts had predicted. The German Services PMI printed at 54.9 and disappointed the 57.1 forecast.

The EZ flash manufacturing PMI came in at 54.8 after it was predicted to print at 57.6. Meanwhile, the flash services PMI came in at 55.4 and disappointed the 56.6 consensus. Ouch!

I wonder if today’s reports will be able to provide the euro some support.

At 6:00 am GMT, Germany will release its final version of the its GDP report for the first quarter. No changes are expected from its initial estimates which showed that the economy grew by 1.5%.

Then at 8:00 am GMT, we’ll have the German Ifo Business Climate index for May. It is eyed to come in at 113.9, implying that manufacturers, builders, and retailers see that economic activity waned during the month from April when the report printed at 114.2.

Finally at 9:00 am GMT, euro zone’s industrial orders report will be released. Take note that a 1.2% decline in orders is anticipated for March.

Be on your toes for better-than-expected figures as these will probably boost the euro in today’s trading!

498

Thanks to some good news from the euro zone, EUR/USD was able to slightly recuperate its losses yesterday. It closed out the U.S. trading session at 1.4109, a solid 50 pips higher from its opening price during the Asian session.

The German IFO business climate survey printed a reading of 114.2, better than the 113.9 figure initially predicted. The report also indicated that while the six-month outlook was somewhat dampened, it is still positive.

Statements from European Central Bank (ECB) members also provided support for the euro. Christian Noyer, the governor of the Bank of France, said in an interview that Greece shouldn’t restructure. He, together with Ewald Nowotny and Juergen Stark, believe that Greece should just stick with austerity programs.

The only bad news that came out from euro zone was the industrial new orders report. It showed a decrease of 1.8%, worse than the 1.2% decline expected and opposite the 0.5% gain seen the previous month.

Today, the only interesting piece of data is the Gfk German consumer climate at 6:00 am GMT. The survey, which measures how confident consumers are on their financial standing, is slated to show a reading of 5.7. If the actual result comes in higher, we may see the euro continue with its relief rally.

499

Did y’all see that?! The euro just jumped by 500 pips against the Greenback as euro zone debt problems magically disappeared! Sike! With all the debt troubles in the euro zone right now, it’s no surprise that EUR/USD and EUR/JPY both chalked up another losing day. EUR/USD ended up at 1.4084 while EUR/JPY closed at 115.50.

Aside from ongoing debt concerns, the euro was also weighed down by a weak German GfK consumer climate reading. Instead of holding steady at 5.7, the index dropped to 5.5 this May, implying that consumers are less confident about their financial standing. I took a quick peek at the components of the report and found out that the euro zone debt crisis and the surge in energy prices were the main reasons for the decline in consumer confidence.

Luckily for EUR/USD, traders showed no love for the safe-haven Greenback when the U.S. released weak durable goods orders figures. Because of that, the euro was able to recoup some of its losses.

Euro zone won’t be releasing any economic reports today but make sure you keep your eyes and ears peeled for ECB President Jean-Claude Trichet’s speech at 5:20 am GMT. Most traders are waiting to see whether the central bank head would say anything about the euro zone debt crisis and its impact on the ECB’s policy stance. Upbeat words from Trichet could provide further support for the euro while pessimistic ones could push it lower. Good luck trading!

500

Aaah! There’s nothing like a classic case of “Loose lips, sink pips” to send a currency into the bear lair, huh? The euro lost to almost all of its counterparts yesterday. It fell to a new low at 1.2201 against the Swissy, scored a 45-pip loss to the yen, and tumbled 89 pips from its intraday high to end the day at .8623 against the pound.

Eurogroup President Jean-Claude Juncker spooked investors during the New York session when he said that if a review of the Greece’s balance sheets show that it cannot afford financing the next 12 months, the IMF may not give the country its tranche of aid in June. Consequently, this intensified concerns of Greece defaulting on its debt. Uh oohh.

However, before you go on a euro-selling frenzy, take note that Juncker only based his statement on the IMF’s rules and he doesn’t speak for the institution. In fact, soon after his speech, ECB member Gonzales-Paramo said that he doesn’t see Greece not being able to meet the necessary requirements to be granted aid.

This is probably one reason why the euro was able to hold on to its gains against the dollar. EUR/USD ended yesterday’s trading 61 pips higher at 1.4145.

Nonetheless, be on your toes for such surprises in today’s trading. I have a feeling that the second-tier data we have on tap won’t really move the currency.

At 12:00 am GMT, Germany’s CPI report for May will be released. It is expected that inflation pressures eased during the month with the forecast only half of the figure we saw for April at 0.1%.

Then at 8:00 am GMT, we’ll have M3 Money Supply report for April. It is expected that the change in the total amount of euros in circulation during the month increased by 2.5%.

501

“[I]I just can’t get enough…[/I]” The euro bulls did a Black Eyed Peas number last Friday when they pushed the euro higher against most of its pip comrades. Though EUR/CHF slipped by 61 pips to 1.2181, EUR/USD climbed by a whopping 149 pips to 1.4286. Meanwhile, EUR/GBP also inched by 46 pips higher to .8668.

If you’ve been too busy planning your long weekend last Friday, you should know that broad dollar weakness and a bit of risk appetite in markets helped offset worse-than-expected economic reports from the euro region.

For starters, Germany’s CPI report printed flat in May after clocking in a 0.2% growth in April. Then, ECB President Jean Claude Trichet also issued a somewhat dovish statement, saying that although an interest rate hike is likely this summer, it’s not necessarily on the horizon.

Well, we’ll just have to see if this week’s economic reports will give reason for the ECB to hike its interest rates. No data will be released today, but Germany’s retail sales will be published tomorrow at 6:00 am GMT, followed by the euro region’s unemployment figures around 9:00 am GMT.

On Wednesday at 1:00 pm GMT and Thursday 9:00 am GMT Trichet will take the spotlight with his speeches. Should we watch for anything related to the region’s sovereign debt problems? I think so!

Good luck in your trades today, kids!

502

The euro gapped up against the dollar to start the week, but that was about the only piece of action we got on EUR/USD the entire day! Boooring! After opening at a three-week high (1.4332), EUR/USD turned off the afterburners to consolidate and coast down to 1.4282.

Liquidity was about as thin as Pip Diddy’s hair yesterday, what with the U.S. and U.K.celebrating holidays. Unfortunately, the euro zone didn’t give us much to work with either as it didn’t publish any reports yesterday.

Hopefully, things will pick up today as we’ve got quite a lineup of reports coming our way.

First to come out of the cage (6:00 am GMT) is German retail sales data, slated to show a 1.7% rise following the previous month’s 2.7% decline.

Next up at 6:45 am GMT, we have the French consumer spending report, which is expected to slow its contraction from -0.7% to -0.3%.

Then at 7:55 am GMT, Germany will print its unemployment change data. According to forecasts, a net total of 31,000 Germans were probably employed last month, a decent follow up to March’s 37,000 increase.

Finally at 9:00 am GMT, the euro zone will roll out the big guns and print euro zone-wide CPI and unemployment rate data. CPI is expected to remain steady at 2.8% just as the unemployment rate is anticipated to stay at 9.9%.

These reports have the ability to move the euro, but keep in mind that the markets’ spotlight has been focused on Greece’s debt problems lately. That being said, these reports could take a backseat if new developments regarding Greece’s headaches pop up. Keep your eyes peeled, ya hear me?!

503

“[I]One day EUR in, and the next day EUR out[/I].” The euro bulls were definitely in the zone yesterday as they pushed the euro significantly higher against its counterparts despite the release of worse-than-expected economic reports from the region. The euro blasted the yen with a 172-pip gain, while EUR/USD also posted a 109-pip win.

If you’re trading strictly on fundamentals without considering market sentiment, you probably would’ve shorted the euro like it’s the end of the world… or not. Germany’s retail sales printed to the downside with only a 0.6% growth in April when expectations were for a 1.7% rise. What’s more, Germany’s unemployment figures decreased less than what market geeks had predicted, printing only a decrease of 8,000 unemployed workers against expectations of a 31,000 decline.

As for the whole region, a report on CPIestimates showed a dip to only a 2.7% rise from April’s 2.8% figure, which supports ECB President Jean Claude Trichet’s slightly dovish comments last week. Last to come out yesterday was the region’s unemployment rate, which remained fixed at 9.9% in April.

Fortunately for the euro, the market bees were busy buzzing about a possible second bailout for Greece by the end of this month. Though there were hardly any reports or official speeches to confirm the issue, the possibility of hope for the first economy in the region to get a bailout provided the euro bulls reason to push the currency higher.

Maybe we’ll know more about the plans for Greece today when Trichet gives his speech in Aachen at 1:00 pm GMT. If he gives any hint that the euro officials are just about done scratching their heads on what to do with Greece, then we might see the euro climb higher against its counterparts.

Good luck in your trades today!

504

So much for trying to stay above the 1.4400 mark! EUR/USD struggled to stay afloat but gave way when weak U.S. data spurred risk aversion. After reaching a high of 1.4460, EUR/USD ended the day at 1.4341. Meanwhile, EUR/JPY closed 125 pips lower than its 117.31 open price.

Disappointing ADP employment figures and ISM manufacturing PMI from the U.S. triggered a safe-haven rally yesterday, causing the euro to lose ground against the Greenback, Japanese yen, and Swiss franc. To add insult to injury, Moody’s credit rating agency slapped Greece with a sovereign debt downgrade from B1 to Caa1. That’s worse than junk bond status!

According to the rating agency, they foresee that Greece is facing increasing risks of not being able to solve its debt problems. It looks like Moody’s doesn’t believe that the second Greek bailout package currently being drafted by the EU and IMF could end the debt drama.

Euro zone is on a bank holiday today in observance of Ascension Day, but ECB President Jean-Claude Trichet is set to give a speech at 9:15 am GMT. If the central bank head manages to reassure the markets that Greece will survive the debt crisis and that the rest of the euro zone will remain unscathed, the euro could have a chance to bounce back. Otherwise, if he confirms that Greece’s debt problems could delay the ECB from normalizing its monetary policy, euro pairs could be in for steeper declines. Stay on your toes!

505

They say that all things must pass. That doesn’t apply to Greece’s bailout problems just yet, but rumors about it sure helped the euro yesterday! Speeches on the issue and a successful bonds auction in Spain lifted the euro and sent EUR/USD 150 pips higher at 1.4491. Meanwhile, EUR/CHF also edged higher from its record lows at 1.2227.

Though no economic data was released from the euro zone, speeches made by the region’s officials suggest that they might be getting close to solving (or at least delaying a default) for Greece’s sovereign debt problems. What’s more ECB President Jean Claude Trichet even buzzed about a common Finance Ministry for the whole euro zone! Looks like the big bosses are (finally) getting serious about this, eh?

For today only the final services PMI at 8:00 am GMT will be released from the euro zone. Of course, we all know that markets will barely look at euro zone reports today, especially when the big NFP and unemployment reports will be released from the U.S. today at 12:30 pm GMT. The NFP report usually inspires volatility that’s crazier than the Justin Bieber fan girls, so make sure you keep a close eye on this one!

506

Instead of getting down on Friday, the euro spent more than half a day sizing up its counterparts before launching an attack during the U.S. session. Because of that, both EUR/USD and EUR/JPY were able to end the day with a win. EUR/USD closed above the 1.4600 handle while EUR/JPY landed 7 pips shy of the 117.50 level. Will the euro be able to hold on to its gains?

A weak U.S. NFP figure pushed EUR/USD out of consolidation to rally above the 1.4600 handle. News of a second bailout plan for Greece also boosted euro pairs as Eurogroup President Jean-Claude Juncker announced that a new aid plan has also been approved for the nation as well. Is it just me or is Jean-Claude a really popular name among euro zone leaders?

Anyway, the conditions of the new aid plan still depend on the assessment by the EU and IMF, along with the implementation of the new privatization plan for Greece. Sure, it sounds hopeful but I assure you, this won’t be a cakewalk. Greece will have to undergo strict belt-tightening measures, which involve cutting public sector employment, higher taxes, and fewer tax exemptions.

Since the euro zone isn’t set to release any big reports today, this improved outlook for Greece’s debt could keep providing support for the euro. Still, it’d help to keep an eye out for the Sentix investor confidence and euro zone PPI due 8:30 am GMT today. Investor confidence is expected to dip from 10.9 to 9.4 while PPI could show a 0.8% uptick. Stronger than expected figures could give the euro another boost so stay on your toes!

507

The euro zone didn’t have any big reports to spoil the euro’s recent rally, but the fact that financial bigwigs were bickering like little girls was enough to rain on the euro bulls’ parade. The lack of agreement over Greece’s debt helped push EUR/USD 50 pips down and EUR/JPY 57 pips down.

Just when you thought everything was set for Greece’s second bailout, here comes a party pooper! According to the German Finance Ministry, Greece’s second bailout isn’t a done deal at all.

Adding to the conflict, Eurogroup chairman Juncker argued with Jean-Claude Trichet regarding his idea of a single Finance Ministry for the entire euro zone. He even went out to say that the euro is overvalued! With such big words coming from a euro zone big dog, it’s no wonder the euro sold off yesterday!

Maybe a couple of positive reports can help turn the tables in favor of the euro. At 9:00 am GMT, the euro zone is set to publish retail sales data for the month of April, which is slated to show a 0.4% rise following its 0.9% drop in April.

An hour after that, German factory orders data will be available. Look for it to show a 2.1% rise, a nice improvement from the 4.0% decline it printed last time.

As always, keep your eyes peeled for any more announcements from euro zone officials! There’s a lot of uncertainty surrounding Greece’s fate, and the markets would appreciate any light on the matter.

508

The euro was so hot during yesterday’s trading, you could’ve cooked pipza on it. Ha! EUR/USD ended the day 117 pips higher at 1.4682. Against the yen, it was able to bag a 76-pip win when EUR/JPY parked at 117.48.

With the positive reports we saw from the euro zone yesterday, it wasn’t much of a surprise to see the bulls rally.

The retail sales report for April showed that consumer spending was more than double the 0.4% consensus at 0.9%.What made the report even better was the upward revision to March’s reading to -0.9% from -1.0%. Boo yeah!

The German factory orders report for the same month also might have boosted the euro. It showed that the total value of orders that manufacturers received in April increased by 2.8% and topped expectations which was for a 2.1% uptick.

News about China being concerned about its U.S. dollar holdings might have also been bullish for the currency as this spurred talks that it would diversify to euro-denominated assets.

I wonder if today’s reports will have the same effect on the euro.

At 6:00 am GMT we’ll have the German trade balance report for April which will be followed by the French trade balance report at 6:45 am GMT. It is expected that German exports outpaced imports by 14 billion EUR during the month. Meanwhile, France is anticipated to report a 5.6 billion EUR trade deficit.

Then at 9:00 am GMT, traders are expecting to see no changes in euro zone’s revised GDP for Q1 2011. The forecast is still at 0.8%.

Last on our forex calendar for the euro today is the German industrial production report for April. Note that the consensus is for a 0.1% increase in the value of output produced by the country’s industrial sector.

Make sure you ain’t snoozin’ when these reports are announced later, ayt? Peace!

509

On Tuesday it was hot, but on Wednesday it was NOT! Still ailing from the disagreement of financial bigwigs over Greece, the euro was dealt another blow as it was struck with a bit of risk aversion yesterday. As a result, traders ditched the shared currency like it was going out of style, pushing EUR/USD down 112 pips and EUR/JPY down 105 pips.

It seems like the only thing finance officials can agree on is to disagree! Rumor has it that the European Union, IMF, and ECB may not hand Greece its next dole out after all. When will they make up their minds??

Adding to the bad vibes, yesterday’s releases were all in the red! Both Germany and France failed to meet forecasts with their trade balance figures. And while no revisions were made to the euro zone GDP (as expected), the German industrial production report failed to deliver the 0.1% increase that was anticipated, and instead, showed a horrific 0.6% drop. Yowza!

As Forex Gump had so kindly reminded us in his article on today’s 3 interest rate decisions (READ IT!), the ECB will be making its rate statement later today. The ECB has sounded hawkish in the past, but weaker inflationary pressures and bad data might cause it to ease off the hawkishness this time around. In any case, be sure to tune in at 11:45 am GMT, because whatever is said may dictate price action for the euro for the next week or so.

510

What the heck just happened?! Even with Trichet saying his favorite catch phrase “strong vigilance,” the euro came tumbling down yesterday! EUR/USD closed 59 pips lower at 1.4511, after it had been trading as high as 1.4649 earlier in the day.

Once again, ECB President Jean Claude Trichet expressed a rather hawkish tone during the ECB’s rate statement, as he basically signalled an upcoming rate hike next month. Trichet has been adamant about taming inflation despite the struggles that some euro zone participants (PIIGS) are going through. Current ECB inflation forecasts are for inflation to be 2.5% to 2.7%, above the bank’s 2.0% target.

In addition, the ECB made some upward revisions to its GDP forecasts, as they now predict that the region will grow by 1.5% to 2.3%. Last March, the band was between 1.3% and 2.1%.

So you would have expected the euro to gain on this news right? After all, shouldn’t hawkish comments and upwardly revised GDP forecasts be a sure fire recipe for success?

Well, apparently NOT! By the looks of things, this seems like a “buy-the-rumor, sell-the-crap-out-of-the-news” move by the market. Many had expected hawkish comments from the ECB, so we probably saw some profit taking take place.

In addition, I think the weak Greek GDP figures may have contributed to the sell-off. Last quarter, Greece saw a decline in GDP of -5.5%, WAYYYY off the expected -4.8% contraction.

Greek PM Papandreous is still waiting for approval of additional austerity measures from other lawmakers in order to comply with new bailout requirements. If Greek officials cannot agree to these measures, then it may spark concerns about the bailout. And you know what that could mean – another euro sell-off!!!

For today, no hard data coming out, but Trichet will be speaking again today at 6:50 am GMT at the Center of Financial Studies. As the head of the ECB, it’s always important to keep track of when he’s speaking, cause you never know when he might say something about monetary policy!

511

It appears that the third time is NOT the charm for the euro as it posted losses across the board again last Friday. EUR/USD closed the U.S. trading session on Friday a whopping 177 pips lower from its opening price during the Asian session. Meanwhile, EUR/JPY staged a massive 151 drop.

The euro continued to be pressured lower by the less aggressive European Central Bank (ECB) statement that was released earlier in the week. In the ECB’s statement, while the bank did not omit the words “strong vigilance,” the bank also did not promise to a rate hike. In addition, the ECB also revised its inflation forecast lower.

Economic data releases proved to be detrimental to the euro too. The French industrial production came in weaker than expected at -0.3% and the German wholesale price index reported a flat reading versus the 0.5% gain initially expected.

The forex calendar this week won’t be as heavy as last week. The only “big” report coming out is euro zone’s consumer price index. Set to come out on Thursday at 9:00 am GMT, the CPI is expected to show a gain of 2.7%. Meanwhile, the core version of the report that excludes volatile items such as food, energy, and alcohol in its computation is predicted to show an increase of 1.6%.

512

What a wacky world we live in! Even though Greece got hit with another debt downgrade, the euro still managed to post some gains yesterday! EUR/USD rose 68 pips to finish at 1.4415 while EUR/JPY closed at 115.63, up 38 pips on the day. Could this be the start of another bullish euro run, or will sellers find this as an opportunity to add to their short positions?

Yesterday, our buddies over at Standard and Poor’s downgraded Greek debt from B to CCC. But instead of the euro wilting, it blossomed and remained steady across the charts. What gives?

Well, considering that other ratings agencies had already handed out downgrades, it was probably only a matter of time till S&P followed suit.

In any case, Greek bonds now have the lowest sovereign debt rating in the world, and it’s really starting to look like they’ll have no choice but to default. European leaders will be meeting next week to discuss what to do with Greece so until then, we may see some choppiness in the markets.

Looking ahead, no biggies on the docket today, so we may see range bound trading today.