Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
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Just when you thought the euro was poised for another magnificent rally and post new monthly highs during the morning European trading session, it was brought back down to earth once the U.S. trading session rolled along. EUR/USD, which started off at 1.3548, had gone as high as 1.3679 before falling back to close the day at 1.3588.

It appears that Germany’s positive EFSF vote was what fueled the initial euro rally. The German Bundestag, or the lower house of Parliament, approved the expansion of the euro zone bailout fund with 523 members voting “yes” and 85 voting “no.”

Today, we’ve got a couple of tier 1 reports that could move the euro.

The first one, the German retail sales report, comes out at 6:00 am GMT. The market expects the report to show a 0.4% decrease, slightly worse than last month’s 0.3% increase (revised up from 0%).

Following the retail sales report is the CPI Flash Estimate at 9:00 am GMT. The CPI, which measures the inflation rate for the entire euro zone, is predicted to be at 2.5%, exactly the same as the previous month.

We’ll also see the euro zone unemployment rate published at the same time. The forecast is a 10% figure in September, similar to the number in August.

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The currency bears sure know how to party! The euro bears ended the trading month with a bang last Friday as they dragged the euro to multi-hundred-pip losses against its major counterparts. EUR/USD ended up falling by 194 pips to 1.3396, while EUR/GBP also plunged by 112 pips to .8592.

Aside from concerns on the euro zone debt crisis, the mixed economic reports from the region also helped bring down the common currency. Germany’s retail sales fell by 2.9% in August, the steepest monthly decline for the year, while consumer spending in France also fell below expectations in July and August.

Not all of the reports disappointed the markets though. Italy’s unemployment rate fell from 8.0% to 7.9% in August, while the euro zone’s CPI unexpectedly accelerated to 3.0% in September, which dampened talks of an ECB interest rate cut. Lastly, the euro region’s unemployment rate remained at a whopping 10% in August.

Will today’s euro zone reports provide any relief for the common currency? Germany is on a bank holiday today in celebration of the German Unity Day, but the region’s final manufacturing PMI will be released at 8:00 am GMT.

As exciting as the manufacturing PMI report though, traders will probably be watching the troika (EU, ECB, and the IMF) for any updates on their assessment of the Greek economy. Word on the street is that the report might provide insights on how soon Greece will get its next installment of the bailout package (if it’s getting it at all), which might provide volatility in your favorite euro pairs.

Stay glued to the tube for updates on the euro zone debt drama! You’ll never know when risk sentiment is going to hit your charts!

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Wave after wave after wave! The headaches just keep coming for the euro as Greek woes continued to batter the shared currency. With so much uncertainty surrounding the euro zone debt situation, traders took it upon themselves to sell EUR/USD, which finished almost 200 pips lower at 1.3396. Bummer!

The euro can’t seem to shake off the ghosts of Greek’s past, huh? Once again, concern over Greece’s debt situation has dragged it down! Greece has already admitted that it won’t be able to meet its deficit target this year. To make matters worse, European finance ministers still haven’t come to an agreement as to when Greece will receive its next tranche of bailout money.

And it’s starting to look like not everyone is willing to expand the EFSF. Luxembourg Finance Minister Frieden doesn’t think it’s necessary, while Finland has gone on record to say it doesn’t want to increase the fund as well.

All in all, it appears as though the euro zone isn’t getting any closer to solving its problems, which has discouraged those who were hoping for an orderly resolution. Some are starting to believe that the ECBmay have to declare an emergency rate cut in its rate decision later this week!

Phew! Sentiment has really gotten bearish for the euro, and chances are, we’ll continue seeing it sell off today. But don’t get too cozy. European officials will be having their ECOFIN meeting today, and any surprise announcements from their assembly could shake up the euro.

Also, ECB President Trichet is due to speak at 1:00 pm GMT. He might just give hints as to what the ECB will do on Thursday, so be sure to tune in!

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Did we see a relief rally or just an overdue correction? In any case, an improvement in appetite for the euro pushed it higher against its major counterparts, boosting EUR/USD 117 pips up to 1.3321. Meanwhile, EUR/JPY also enjoyed a 130-pip lift to 102.45.

With the euro-friendly reports raining in the markets yesterday, it’s no wonder that the euro bulls stepped up! ECB President Trichet fired the first salvo in his speech yesterday when he sounded less dovish than markets had expected. As it turned out, he wasn’t in any hurry to cut interest rates like what many analysts were betting.

The Financial Times kept the fuel running for the currency bulls when it released a report saying that the EU ministers were planning on injecting additional capital to the region’s banks. That might not be the solution that markets were waiting to hear, but hey, it’s a lot better than doing nothing, right?

U.S. Fed Chairman Ben Bernanke sealed the deal for the high-yielding currencies when he hinted that the Fed is willing to up its game if the economy ends up needing more help (which it does). Traders took it as a signal for more QE, which might cause overall weakness for the dollar and strength for its high-yielding counterparts.

On the euro zone’s economic front, the region’s PPI showed a 0.1% decrease in August, which might not be as bad as the 0.2% decrease that market geeks were expecting, but is still lower than July’s 0.5% growth figure.

Will the euro gain more ground in the markets today? At 8:00 am GMT the revision to the euro zone’s services PMI will be released, followed by the region’s retail sales report for August at 9:00 am GMT. Lastly, we’ll see the revised GDP report also at 9:00 am GMT. The reports are generally expected to slip a bit from its previous figures, but a significant divergence from expectations might set off volatile price action for the euro pairs.

Good luck in your trades today!

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The euro had a mixed performance yesterday as it pocketed some gains against the Greenback but ended in stalemate against the Japanese yen. EUR/USD landed 24 pips up from its 1.3321 open price while EUR/JPY closed at 102.45. With the ECB rate decision scheduled today, which way will the euro go?

It’s a big day for the euro as the ECB is set to announce its monetary policy decision at 11:45 pm GMT. Although the central bank is expected to keep rates on hold at 1.50%, there’s still a lot of speculation that Trichet and his men would cut rates in order to spur liquidity in the region. Some are expecting the central bank to announce new liquidity measures in order to provide support for their troubled banking sector. However, there are those who believe that Trichet won’t do anything drastic as he prepares to step down after his last interest rate decision. In any case, keep your eyes and ears peeled during the actual statement because it could be a big mover for the euro!

Don’t forget that Germany is also set to release its factory orders data at 10:00 am GMT, right before the ECB statement. They could print a 0.2% increase in factory orders for August, after showing a massive 2.8% drop in July. A stronger than expected figure could provide some support for the euro but this report isn’t likely to cause big moves as traders await the ECB decision.

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What a crazy day for the euro! After hitting an intraday low at 1.3241 midway through the London session, EUR/USD reversed its losses and by the end of the day, was trading above the 1.3400 handle! That’s what you call a comeback!

As it turns out, Jean Claude Trichet and his band of ECB policymakers didn’t cut interest rates, but they did provide the markets with some liquidity boosting measures. The ECB decided to introduce 12-month and 13-month loan facilities, as well as a 40 billion EUR covered bond purchase program.

This, along with comments by European Commission head honcho Barroso that there would be coordination between European leaders to ensure the stability and soundness of the banking sector, gave the euro nice support, allowing it to reverse its earlier losses.

Furthermore, this gives incoming ECB President Mario Draghi a clean slate, although there are those who believe that he’ll kick start his reign on the euro zone with a rate cut next month!

For now, it’s time to bid adieu to Mr. Trichet! Au revoir and merci beacoup for a job well done!

For today, we’ve got German industrial production figures on tap at 10:00 am GMT. Word through the forex grapevine is that after the spectacular 4.0% increase we saw in July, production most likely dropped by 1.6% last August. Now, I don’t really expect this to move the market too much, as chances are that everybody will be waiting for tonight’s NFP report!

Make sure you check out my buddy Forexgump’s latest write-up to see how you can make pips trading the NFP!

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Just when I thought the euro had it going, Fitch comes in and slaps a downgrade on both Spain and Italy! EUR/USD barely enjoyed its stay around the 1.3500 handle before dropping to a low of 1.3361 and closing at 1.3387. EUR/JPY wasn’t spared from the tumble as it ended 12 pips below the 103.00 mark.

The euro was forced to let go of its gains on Friday when credit rating agency Fitch downgraded Spanish and Italian debt. Considering Fitch usually follows the footsteps of its fellow rating agencies Standard & Poor’s and Moody’s, the markets were taken aback with the announcement. According to Fitch, they were growing concerned about the worsening euro zone debt crisis, the risks to fiscal consolidation, and the downward revision to Spanish growth prospects. Yikes!

The good news is that, over the weekend, French President Sarkozy and German Chancellor Merkel announced that they’ve reached an agreement to help strengthen euro zone banks. However, they kept the details to themselves and simply assured that they’re determined to do all that’s necessary to keep the crisis contained. I can’t wait to see what they’ve cooked up but, in the meantime, let’s take a look at the upcoming economic reports from the euro zone.

Today, they’re set to report Germany’s trade balance at 2:00 am GMT and show that the surplus narrowed to 9.8 billion EUR in August. A few minutes later, the French and Italian industrial production data will be released. France is expecting a 0.7% drop in its industrial production while Italy could print a 0.2% uptick. Later on, the euro zone Sentix investor confidence index could show a drop from -15.4 to -19.2 for October. With all that’s going wrong in the euro zone, I wouldn’t be surprised if investors are much more pessimistic about the region’s economic health. Keep an eye out for that report due 4:30 am GMT.

No economic reports are due on Tuesday but ECB President Trichet is set to testify then. However, his remarks on the economy might not have as much impact as they used to, considering he’s about to step down from his post soon.

Then, on Thursday, the ECB monthly bulletin will be released. This could shed more light on how the other ECB policymakers view the euro zone economy and where they think monetary policy should go. Should they cut interest rates eventually? Or would it be better to stick to other liquidity measures? These are just some of the questions that could be answered through the central bank’s monthly bulletin and I’ll be sure to let you know the inside scoop once it’s released.

Friday has the euro zone CPI data on tap and these could show that inflationary pressures are still strong in the region. Headline CPI is expected to show an annualized 3.0% increase while the core figure could show a 1.5% rise.

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EURO FTW!!! With investors full of hope for a bailout plan to be finalized by the end of the month, the euro flew up the charts and never looked back. It marked a 294-pip gain against the U.S. dollar, while rising 216 pips against the Japanese yen. What a way to start the week!

The euro received its first green light to rally when the euro zone’s reports gave the economy positive feedback. Instead of shrinking to 9.8 billion EUR, Germany’s trade surplus widened from 10.6 billion EUR to 13.8 billion EUR. Likewise, France printed better-than-expected results by showing a 0.5% rise in industrial production instead of a 0.7% decline. Italy also wowed investors when it revealed an increase of 4.3% in industrial production, which is far better than the puny 0.2% uptick that most had predicted.

As awesome as all these reports may be, what really got euro bulls going was news that Germany and France have finally vowed to come up with a new package to help shore up European banks. According to German Chancellor Angela Merkel and French President Nicolas Sarkozy, they’re ready to support Europe’s troubled banks, but the details of their agreement will remain under wraps until later this month.

Of course, traders went crazy for the euro when they learned about this because Germany and France have been two of the biggest obstacles to reaching an agreement towards a major bailout package for the euro zone. With those two economic giants on the bandwagon, anything’s possible now!

It’ll be interesting to see if ECB President Trichet has anything to say about this when he testifies before the European Parliament’s Economic and Monetary Committee later at 7:30 am GMT. With just days left in his term as the ECB President, will Trichet leave us with important parting words? You’ll just have to tune in to find out!

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And the Troika saves the day! The euro traded lower for the most part of the Tokyo and London sessions yesterday, with EUR/USD hitting an intraday low of 1.3566 and EUR/JPY bottoming out at 104.03. It wasn’t until during the New York session that the euro started to rally and ended the day with a 28-pip gain against the dollar and an 18-pip gain against the yen.

After the long, torturous wait, the EU, IMF, and ECB (aka the Troika) finally agreed to release Greece’s sixth tranche of aid. News about the debt-ridden country will getting its money around early November was enough for investors to start stacking up ‘em euros in yesterday’s trading.

Just be wary about being bullish for the euro though. You should know that officials still maintain their gloomy outlook for Greece. On top of that, we also saw that Slovakia rejected the vote to increase the EFSF yesterday. Market junkies say that the only reason why the euro was still able to rally is because they expected the Slovakian parliament to approve the bill eventually. But if it doesn’t, it could spell disaster for the euro.

Hmmm, I wonder if there are still enough good vibes from the announcement to boost the euro in the charts today. Make sure you keep close tabs on market sentiment, ayt?

Also, don’t be snoozin’ around when the industrial production report from the euro zone is released later. At 9:00 am GMT, the report is expected to print a contraction of 0.8% in industrial activity. A better-than-expected figure will probably be bullish for the currency while a disappointing one could send it to the bear lair.

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No midweek reversal for the euro! For the third straight day, it soared up the charts as the markets’ strong risk appetite lifted the shared currency. Positive developments in Slovakia helped fuel demand for the euro, which gained 112 pips against the dollar and 180 pips against the yen.
Industrial production data also had a hand in boosting the euro, as it printed in the green yesterday. Rather than showing a 0.8% decline in output in August, the report revealed a surprisingly healthy 1.2% uptick. To top it all off, the previous month’s 1.0% increase was revised up to 1.1%! Apparently, big gains in France, Portugal, and Italy overcame a drop in German output.

But of course, the impact that this report had on the markets pales in comparison to the markets’ reaction to news that Slovakia’s political parties reached a deal regarding the EFSF changes. As you all know, Slovakia had rejected the vote to increase the EFSF on Tuesday. But as it turns out, Slovakia may not be so opposed to the idea after all. Reports say that an agreement has been made that may lead to the parliament’s approval of the expansion of the EFSF. In other words, there’s hope yet!

Today, the only report due is the ECB monthly bulletin. Though it probably won’t shake up the markets, you may be interested to catch its release at 8:00 am GMT since it will reveal key stats that the ECB evaluated for its interest rate decision last week. In the meantime, be sure to keep your eyes and ears open for new developments in Europe!

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What a topsy turvy day for the euro! The shared currency lost ground to most of its major counterparts during the Asian and London sessions but bounced back during the U.S. session. However, its rebound wasn’t enough to erase all its intraday losses as EUR/USD ended 6 pips below its 1.3792 open price while EUR/JPY closed 4 pips below the 106.00 handle.

Mixed developments in the euro zone debt crisis could explain the euro’s erratic mood yesterday. On the one hand, it’s mood was lifted by Slovakia’s approval of the EFSF expansion, giving the thumbs-up for the bailout fund to increase to 440 billion EUR. Aside from that, the recently released ECB monthly bulletin revealed that the central bank has enough tools to ensure that European banks won’t suffer from liquidity constraints. The report urged euro zone governments to stick by their commitment to provide aid to distressed banks in the region.

On the other hand, rumor has it that new ECB President Mario Draghi is thinking of cutting rates in order to boost the euro zone economy. This had some market participants worried since inflation in the euro zone is way past the central bank’s 2% target. Cutting rates would undermine price stability in the region, which would go against their Maastricht Treaty!

We’ll see whether inflationary pressures are still on a high once the euro zone prints its annual CPI figure at 9:00 am GMT today. The report could show that annual inflation is still at 3.0% for September, with core inflation expected to tick higher at 1.5%. Stronger than expected figures would probably keep the ECB from cutting rates anytime soon, which could be positive for the euro.

Don’t forget to keep close tabs on any news regarding the euro zone debt situation. You never know when another credit rating downgrade is just around the corner so stay on your toes!

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Two words: risk appetite. It seemed that the improving risk appetite among traders and investors came mainly from the positive EFSF reception of the euro zone member nations. EUR/USD closed Friday at 1.3878, more than 500 pips higher from its week open price.

In addition to the EFSF news, the market’s mood was improved even further when Merkel and Sarkozy announced that they would reveal a comprehensive plan to stabilize the euro zone debt situation at the end of October.

Data released were pretty much in line with the market’s forecast. The euro zone consumer price index came just as expected at 3.0% while the trade balance showed a 1 billion EUR deficit, just slightly lower than the 1.1 billion EUR initially predicted.

Now, whether this case of risk appetite will remain in the market will depend on how data comes out this week.

Tomorrow, at 9:00 am GMT, the ZEW economic sentiment survey will be published. It is slated to print a reading of -45.1, which is slightly lower than last month’s -44.6 figure. Meanwhile, the survey that focuses on Germany only is expected to show a -44.7 reading, down from -43.3.

Then, on Friday, the IFO business climate survey for Germany will come out. The market expects a reading of 106.3, a decrease of 1.2 points from last month.

Also pay attention to major reports from the U.S. U.S. reports usually have a strong indirect impact on the euro’s value. Check out my U.S. roundup for that!

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Boy, how things can change in the blink of an eye eh? After testing the 1.3900 handle during the London session, EUR/USD came tumbling down to close at 1.3744, marking a 119-pip drop from its opening price. Meanwhile, EUR/JPY backed off its highs at 107.70 and settled at 105.62, down 116 pips for the day.

So what caused the euro’s anguish?

The euro has been on a high lately, as the markets have been pricing in bank recapitalization and a solution to the debt crisis ahead of this weekend’s EU summit. However, German Finance Minister Schaeuble came out yesterday with some rather disappointing comments, as he said that there wouldn’t be a “definitive solution this weekend.” This caused risk appetite to taper off, allowing the dollar and yen rally against the higher yielding currencies.

In truth, we shouldn’t be expecting a quick and easy fix to the European debt crisis. It’s hard enough to get a dinner going with a group of your best friends – what more planning a solution with 17 countries who all have their own agendas! For now, we can probably expect more expectations management by European officials over the rest of the week.

Today, we’ve got the euro zone and German ZEW economic sentiment reports on tap at 9:00 am GMT. Word through the forex grapevine is that we’ll see both versions continue the index’s recent slide, with the euro zone and German reports printing scores of -44.8 and -45.1 respectively. This would mark the 8[SUP]th[/SUP] consecutive month that the indexes have fallen, indicating growing pessimism in Europe. A worse-than-expected result could trigger another more euro weakness, so watch out!

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Aha! It looks like the euro won against the dollar in yesterday’s tug-o-pips despite bad economic reports. EUR/USD hit a Tokyo session high of 1.3789 and dipped to an intraday low of 1.3652. Euro bulls then hustled some muscle and settled the pair 20 pips above its opening price at 1.3765 by the end of the day’s trading.

Germany’s ZEW economic sentiment index for October showed that the confidence of analysts and investors in the country continued to deteriorate when it came in lower at -48.3 than September’s -43.3 reading. (Forecasts were for a more modest decline of -44.8.) The version of the report for the entire euro zone region was also a disappointment. It printed at -51.2, more than 5 points below the consensus of -45.1.

Oh, and don’t think that the bad news ended there! Officials in France and Germany continued to temper down expectations for the EU summit. According to some market junkies, a few policymakers denied that an agreement has been reached to increase the EFSF. On top of that, Moody’s hinted that France is close to losing its AAA rating. Yikes!

Luckily for the euro, risk appetite somehow stabilized forthe day when positive earnings reports from companies and better-than-expected data were released from the U.S. But are there enough good vibes left in the markets to give the euro its much-needed boost on the charts today? Let’s keep close tabs on market sentiment to find out. Be sure you pay attention to any development in the euro zone debt crisis, ayt?

On the economic front, we only have euro zone’s current account report on tap today at 8:30 am GMT. A narrower deficit of 7.3 billion EUR is expected from the 12.9 billion EUR deficit we saw for August. A better-than-expected figure would probably be bullish for the euro so make sure you don’t miss it!

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After seeing a lot of euro zone drama and rumors that could rival a whole season of Jersey Shore, the euro gave up most of its intraday gains and ended the day lower against its major counterparts. EUR/USD capped the day 20 pips lower than its intraday high, while EUR/GBP closed with a 32-pip loss at .8720.

The better-than-expected current account report was the only economic data released from the euro zone yesterday, but the region certainly didn’t lack any drama. The rumor mill in the markets warmed up early in the day with talks that Wolfgang Schaeuble is stating that the EFSF could be increased to 1 trillion EUR. Unfortunately, the bullish news was quickly denied by the German Finance Minister.

But the action didn’t stop there! Later in the day French President Sarkozy took center stage when he announced that the talks on the EFSF expansion is stuck. As expected, the news excited the euro bears into dragging the currency lower.

Will we hear more conflicting comments from the euro officials today? On the economic front we have the German PPI report out at 6:00 am GMT, followed by the euro zone’s consumer confidence data at 2:00 pm GMT.

Of course, you also need to watch out for any more “comments” and other rumors coming out of the region. As we saw in yesterday’s price action, traders tend to be edgy about any big developments in the euro zone debt crisis, so a statement from any EZ hotshot could push the euro pairs in either direction.

Good luck with trading, folks!

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Just like Willow Smith’s hair, the euro got whipped back and forth on the charts during yesterday’s trading. EUR/USD reached an intraday high of 1.3843 and hit a bottom at 1.3656 before ending the day 32 pips above its opening price at 1.3783.

With only a few days until the much-anticipated EU Summit, the sovereign debt crisis has been the talk of the town. Earlier on in yesterday’s trading, the euro was able to rally on the proposal that the EFSFcould be tapped to buy bonds in the secondary market. Somehow that reassured investors that policymakers have a plan to address the debt crisis.

But the good vibes brought about by the news proved to be short-lived. At the wake of the New York session open, the euro got sold-off when Germany announced that it could postpone the EU Summit on Sunday. Yikes! Of course, some market participants took it as sign that EU officials still don’t have any plan ready.

As we draw closer to the summit, it might be a good idea to keep tabs on updates from the euro zone. Also make sure to pay attention to the German Ifo Business Climate index for October due to be released later today at 8:00 am GMT. The better-than-expected PPI figure for September (0.3% vs -0.2%) might have helped fuel the euro’s rally yesterday. And so, I think a reading higher than the 106.3 forecast could give the euro a little boost in the charts. Watch out!

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The euro’s price action last Friday can be summed up in one word: hope. Thanks to the hope of a coming solution to the EU’s debt crisis, the currency was able to rally across the board, with EUR/USD testing the 1.3900 handle once again.

Even though whether this risk rally we’re seeing is sustainable or not still remains to be determined, but the upcoming economic news releases this week should give us some clues. That being said, let’s take a look at upcoming euro zone reports on the economic calendar.

Today, between 8:00 and 9:00 am GMT, a number of PMI reports from different major euro zone nations will be published. The market generally expects the PMIs to dip lower for this month, which isn’t really a surprise considering all the bad news we’ve been seeing out of euro zone. However, with the recent run in risk appetite, better-than-expected numbers could trigger another strong rally.

Following shortly at 10:00 am is the report on industrial new orders. A 0.1% gain is expected for the report, opposite the -1.6% (revised up from -2.1%) seen the month before.

On Thursday, the German preliminary consumer price index will come out. The forecast is for a 0.1% rise, exactly the same as last month’s figure. A higher-than-expected reading will probably support the euro.

Okay, those are important reports to keep an eye out for out of euro zone this week folks! Good luck trading!

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So near yet so far! EUR/USD edged even closer to the 1.4000 major psychological level, as it chalked up another day in gains and reached a high of 1.3957. EUR/JPY also ended the day on a positive note as it closed 35 pips up from its 105.59 open price. Can the euro extend its wins today?

It seems that market participants are optimistic that European leaders will reach an agreement on a rescue package for the euro zone. Based on their remarks after their meeting held over the weekend, it looks like they’re set on coming up with a solution right away.

However, some traders are still hesitant to buy up the euro since there have been talks that France could get slapped with a credit rating downgrade. You see, credit rating agency Moody’s has been keeping a close eye on France’s finances and if they do decide to give a downgrade or put France on negative outlook, we might see the euro return its recent gains. After all, France is euro zone’s second largest economy and debt problems in the country could be damaging for the entire region, not to mention the EFSF.

On the economic front, data from the euro zone has been mixed like a bag of M&Ms. French manufacturing PMI and German services PMI both came in stronger than expected while French services PMI and German manufacturing PMI missed expectations. Among these figures, only the German services PMI landed back above 50.0, indicating industry expansion. The rest of the figures, along with the overall manufacturing and services PMI for the euro zone, stayed below 50.0.

Aside from that, industrial new orders churned out a surprise 1.9% jump, much better than the predicted 0.1% uptick for August. The previous month figure also enjoyed an upward revision from -2.1% to -1.6%.

Today, Germany is set to report its GfK consumer climate index at 6:00 am GMT. The reading is expected to dip from 5.2 to 5.1 this October, suggesting that German consumers are less optimistic about their economy. A stronger than expected figure would show that consumer confidence is improving despite the ongoing debt problems in the euro zone, and this could provide support for the euro. But if the actual figure misses expectations, the euro could slide away from the 1.4000 mark.

Later on, Belgium will report its NBB business climate index at 1:00 pm GMT. The reading is estimated to dip from -9.4 to -10.0 for October, suggesting that business conditions are worsening in the country.

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Well, well, well, it appears that the bulls and the bears have finally gotten tired of battling it out in the forex arena. Yesterday, the euro simply moved sideways across the board, with EUR/USD trading within a tight 100-pip range. EUR/USD ended the U.S. trading session at 1.3904, barely changed from its open price at 1.3926.

There were a couple of minor economic news releases that came out yesterday too. The first one was the Gfk German consumer climate survey. It printed a reading of 5.3, slightly higher than the 5.1 initially predicted. Second was the Italian retail sales report. It came in below consensus as it showed no increase. Last was the Belgium NBB business climate survey. It showed -10.4, worse than the -10 forecast and the previous month’s -9.4.

With the EU economic summit coming up, I don’t think the euro’s price action will be as quiet today. In fact, I expect a lot of movement as traders price in their expectations for the meeting. Keep your eyes peeled folks, the results of the meeting will probably determine where the euro will go for the next couple of days!

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Despite the lack of progress on the EU-related meetings yesterday, the euro managed to pare back its losses against its major counterparts. EUR/USD held steady at 1.3905, while EUR/JPY climbed from an intraday low of 104.75 to close near the 106.00 area.

There were plenty of reports enough to keep the rumor mills running yesterday, but only a number of them have merit. First, the leaders have given European banks until June 2012 to have core tier 1 capital reserves of 9%.

Next, we also know that the EU leaders are now considering two options to boost the EFSF’s firepower – enhancing credit status of debt issued by EU countries, and creating a special purpose vehicle funded by both the public and private sector.

Unfortunately, the EU leaders can’t agree on how much the EFSF needs to be boosted until they can estimate the impact on the banks’ Greek debt writedowns. While many analysts have been throwing their forecasts into the mix, no agreement has been reached between the leaders and the banks just yet.

It looks like we’ll have to wait a while longer for more issues to be resolved, so keep those stop losses in place as we might hear more volatility-inducing reports in the next couple of hours!