Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
633

Just when it seemed that the euro was starting to bounce back, the bears pounced again! EUR/USD retraced to a high of 1.3413 yesterday before dropping back to its recent lows around 1.3315. EUR/JPY even made a new low as it dipped to 102.70 then closed at 102.90.

Better than expected German Ifo business climate data wasn’t enough to save the euro from another round of losses yesterday. The business index climbed from 106.4 to 106.6 in November instead of dropping to 105.3, signaling that business conditions in euro zone’s largest economy is expected to improve in the coming months. Hmm, it’s interesting businessmen feel that way when the threat of debt contagion is looming and German bond auctions turned out badly the other day.

Speaking of debt, Portugal’s bonds got downgraded to junk status by credit rating agency Fitch. Apparently, Portugal’s large fiscal imbalances, high level of debt across all sectors, and downbeat economic outlook are to blame for the downgrade. With that, it will be all the more difficult for Portugal to finance its debt since investors would be more unlikely to buy their bonds.

Only the German import prices data and the Italian retail sales report are on tap from the euro zone today. These reports aren’t probably going to have much of an impact on the euro pairs’ price action so make sure you keep close tabs on the region’s debt situation. Another round of disappointing news could force the euro to slide even lower against its major counterparts so stay on your toes!

634

True to form, we saw a huge sell-off on Friday and sellers made an absolute killing. EUR/USD broke lower to close at 1.3233, down 116 pips on the day. Overall, the pair dipped 271 pips lower for the week, marking the 4[SUP]th[/SUP] consecutive weekly loss.

A series of downgrades by ratings agencies sank the euro on Friday, as Belgium, Portugal, and Hungary were all slapped across the face with credit downgrades. This is making borrowing for these countries more and more expensive as their ratings approach junk status, if they aren’t there already.

Will the euro continue its slide down the charts to start the week? No red flags coming up today, but watch out for the German preliminary CPI report, which is coming out any time and is expected to show a miniscule 0.1% increase in the prices of consumer goods.

In addition, the GFK consumer climate report is scheduled to be released at 12:00 pm GMT, and is projected to print at 5.2. If this report comes in below the line-in-the-sand 0.0 mark, it would signal deteriorating consumer confidence, which could trigger another round of euro selling.

635

EUR/USD may have gapped up over the weekend and reached a high of 1.3400, but it still ended the day with a loss as it closed 21 pips down from its 1.3332 open price. EUR/JPY, on the other hand, scored a win as it ended up 38 pips above its 103.39 open. Why did the euro have a mixed performance yesterday and what’s in store for the euro pairs today?

The euro was off to a good start but its gains were erased when Italy got slapped with a credit rating downgrade. This time around, the downgrade wasn’t from our usual bunch of rating agencies (Moody’s, Fitch, and S&P) but from another group called Egan-Jones. This independent credit rating agency downgraded Italy’s debt from BB+ to BB as borrowing costs in the country remained extremely high. Bear in mind that both Moody’s and S&P have Italy on negative watch, which means that they are keeping a close eye on the country’s finances and are ready to dole out a downgrade anytime they see fit.

As for economic data, most reports from the euro zone came in worse than expected yesterday. German preliminary CPI stayed flat instead of rising by 0.1% in November while M3 money supply landed at 2.6% instead of the expected 3.4%. This means that there’s less domestic currency in circulation and in banks’ vaults, reflecting a huge drop in liquidity.

The only report which beat expectations was the German GfK consumer climate report, which showed a 5.6 reading, higher than the predicted 5.2 figure and the previous reading of 5.4. This means that, despite the ongoing debt problems in the euro zone, consumers in the largest economy in the region are still confident in their financial standing.

There aren’t any economic reports on the euro zone’s schedule for today so make sure you keep your eyes and ears peeled for any updates from the region. Another set of downgrades could trigger a euro selloff, which could enable EUR/USD and EUR/JPY close the gaps they made over the weekend.

636

What a topsy-turvy day for the euro! It looked like it was gonna lay the smackdown on the dollar early in the London session, as EUR/USD shot up to as high as 1.3443. But by the time the New York session rolled around, the euro lost its luster and EUR/USD gave back all its gains. By the end of the day, the pair had closed at 1.3329, up just 19 pips from its opening price.

So why were traders so bullish on the euro early on?

Apparently, it had to with successful Italian bond auctions. The good news is that people are still buying Italian bonds like they’re Gucci or Prada. The bad news is that just like those famous Italian brands, Italian bonds are carrying a steep price. 10-year bond yields are at 7.56%, which is still above the 7.00% threshold and is unsustainable in the long run. Nevertheless, the markets reacted positively, boosting the euro early on.

But as we all know, market sentiment can change on a dime and that’s exactly what happened yesterday.

By the time the New York session began, the euro took a hit as overall risk aversion swamped the markets when news broke out that the ECB didn’t fully offset the extra liquidity it injected into the markets via bond purchases last week. The markets took this to mean that the ECB was essentially implementing quantitative easing measures in the market, as it was allowing extra liquidity to stay in the markets.
For today, we’ve got a bunch of 2[SUP]nd[/SUP] tier report lined up from the euro zone.

First, German retail sales figures will be on tap at 7:00 am GMT. Expectations are that sales rose by 0.1% last month, down from the 0.3% growth we saw the previous month.

Later on at 8:55 am GMT, the German unemployment change report is expected to show that 6,000 jobs were added to the economy in October. This would be a nice improvement from September’s figures, which showed that 10,000 jobs were lost, which was also the biggest decline in unemployment in more than two years.

Lastly, the euro zone consumer price index will be released at 10:00 am GMT. Word on the street is that inflation is at 3.0%, which would put it at the high end of the ECB’s target band of 1.0% to 3.0%. If this comes in higher than expected, it would probably cause the ECB to be more cautious with regard to more rate cuts down the road.

637

Like the rest of the high-yielders in the currency market, the euro was hot, hot, hot! in yesterday’s trading. EUR/USD dipped to an intraday low of 1.3260 then skyrocketed up the charts to end the day at 1.3437. Meanwhile, EUR/JPY closed the day 44 pips above its opening price at 104.21.

What happened?

Well, it seems like central bankers got tired of waiting on European finance ministers and political leaders to calm the markets and decided to take matters into their own hands. The [Fed](http://www.babypips.com/forexpedia/Fed), [ECB](http://www.babypips.com/forexpedia/ECB), [BOJ](http://www.babypips.com/forexpedia/BOJ), [BOE](http://www.babypips.com/forexpedia/BOE), [SNB](http://www.babypips.com/forexpedia/SNB), and [BOC](http://www.babypips.com/forexpedia/BOC) came together yesterday and provided markets with liquidity by cutting interest rates on dollar swaps. Basically, they have allowed investors to borrow dollars at a cheaper rate just in case liquidity runs low. (Stay tuned for [Forex Gump](http://www.babypips.com/blogs/piponomics/)’s article later to find out more about the matter.)

On top of that, China’s central bank, the PBOC, cut the reserve requirement ratio by 50 basis points. This further boosted risk appetite as there is now more money to go around for banks to lend out. Keep in mind that what is good for the Chinese economy is positive for overall risk because many investors see China's strong demand as one of the main drivers of the global economy.

Of course, it also helped that we saw positive reports from Germany yesterday. Growth in [retail sales](http://www.babypips.com/forexpedia/Retail_Sales) for October surged to 0.7% from 0.3% in September and topped the consensus which was for a measly 0.1% uptick. The change in the number of unemployed people in the country also dropped by 20,000 during the month after increasing by 6,000 in September. Analysts were only eyeing a more modest decline of 6,000.

Now, now, before you get too excited buying up the euro, you should know that the currency is still far from being sexy and knowing it.

For one, there has been no positive development in region’s sovereign debt crisis. European finance ministers have yet to surprise us with their plans to resolve the problem. And also, while it seems like Germany has done relatively well despite the crisis, the remainder of yesterday’s roster of reports suggests that rest of the region seems to have gotten hit hard.

The [euro zone](http://www.babypips.com/school/euro-zone.html) unemployment rate for October inched higher to 10.3% from 10.2% in September while that of Italy’s posted an 8.5% uptick and disappointed expectations for a more modest increase of 8.2%.

With that said, make sure you keep an ear out for updates on the debt crisis, ayt?
638

And the euro rally continues! Yesterday, we witnessed the shared currency head up the charts for the third day in a row as successful bond auctions kept euro sellers at bay. EUR/USD traveled to as high as 1.3522 before it chilled and settled at 1.3461, up 25 pips on the day. Will it end the week with a bang?

The markets were pleasantly surprised to see that France’s and Spain’s bond auctions pushed through without a hitch. Heck, you could even say they were successful! They had no problem attracting demand for their bonds, and this cause bond yields throughout the euro zone to come tumbling down.

However, the euro’s gains were sort of limited by some pretty cryptic words from ECB President Mario Draghi. He basically hinted that the ECB is open to being more involved in finding a solution to the debt crisis.

As he had done in the past, Draghi once again called on euro zone governments to come up with a “new fiscal compact,” saying that it’s “the most important element to start restoring credibility.” This caused many to believe that the ECB would be more supportive if only the European governments would commit to strengthening the eurozone’s budget rules.

But what kind of support can we expect from the central bank? That’s where Draghi was vague. Some believe that the ECB will cut rates as early as next week. Others think that it could expand the scope of its bond purchase program. And then there are those that think we’ll see a combination of both! Well, whatever path the central bank decides to take, the fact that the ECB is considering more action is a grim reminder of just how grave the situation is.

Don’t lose focus now, folks! The weekend is just around the corner. Be sure to keep monitoring developments in Europe if you want to make some last-minute pips. Also, keep an eye on the U.S. nonfarm payroll report, as it could serve as a catalyst for big moves on EUR/USD. Good luck and happy trading!

639

Due to generally bad news from both euro zone and the U.S., EUR/USD was under the control of the bears yesterday. The pair closed the U.S. trading session at 1.3395, a 58-pip fall from its opening price that day.

The final services PMI, a survey which measures what purchasing managers’ think about business conditions, fell to 47.5 from last month’s 47.8 figure. It was also slightly lower than the 47.8 initially predicted. The Sentix investor confidence survey also shared the same story. It printed a -24.0 reading, worse than both forecast and the previous month.

There was one piece of good news though. Euro zone’s retail sales report actually came in double the forecast as it published a 0.4% gain. The -0.7% last month was also revised to -0.6%.

Today, the only important economic report on the docket is the German Factory Orders report. It is slated to show a 0.9% increase, which is opposite the 4.3% decrease from last month. Let’s see if the positive expectation can help EUR/USD regain its losses.

640

It was a relatively quiet day for the euro, which remained steady as the markets recovered from S&P’s threats of downgrades on Monday. EUR/USD closed just 6 pips higher from its opening price to finish right smack at the 1.3400 handle.

A day after ratings giant S&P warned of the possibility of multiple downgrades, German Finance Minister Wolfgang Schauble embraced the threats, hoping that it would spark a fire under European leaders and get them to work together towards a solution. Considering the timing of the threats – right before the year-end EU summit - that is probably EXACTLY what S&P intended to do.

In other news, German factory orders rose by 5.2% last month, which was way better-than-expected and a major turnaround from the 4.6% drop we saw in October. Now I’m not too sure if this will continue, considering that other German data have disappointed, so let’s keep an eye on this over the next couple of months.

For today, all we’ve got German industrial production data coming in at 6:00 am GMT. Expectations are that production rose by 0.3% last month. Still, I don’t expect this report to elicit any strong market reaction. In any case, be careful out there as you never know what might act as a catalyst in the markets!

641

EUR/USD was cruisin’ up the charts like Justin Bieber when the bears suddenly attacked at the 1.3450 minor psychological handle. Consequently, the pair tumbled 100 pips, hitting rock-bottom at 1.3350. Good thing the euro was able to pare some of its losses and ended day with a 3-pip win against the dollar at 1.3402.

What caused the euro’s fall?

From what I’ve heard, it seems like investors got jittery when the ECB announced that the demand for dollars by European banks through its swap auction was more than what was anticipated. Analysts were expecting that banks would only take up around 20-40 billion USD during the three-month operation. However, it turns out that European banks got 50 billion USD, highlighting the region’s funding difficulties.

I have a feeling that the negative vibes from the news ended yesterday though. The concern may further be reflected in during the ECB interest rate decision later today at 12:45 pm GMT. Most market junkies aren’t expecting the central bank to cut rates, but it seems like they’re bracing for ECB President Mario Draghi to discuss easy monetary policy tools that would help stimulate bank lending and promote growth.

So with that said, it might be a good idea to keep an ear out for what the head honcho has to say!

642

You gotta give it to the European officials – they definitely know how to maximize their impact under the spotlight! Between talks of EU Summit developments and the ECB’s interest rate decision, there was no lack of volatility-inducing events from the euro zone yesterday. Too bad it was all bearish for the euro!

By the end of the day the euro zone government bonds were back on their way to their all-time highs, while the euro dropped across the board. EUR/USD plunged by 64 pips after sliding to an intraday low of 1.3289, while EUR/JPY also capped the day 43 pips below its open price after reaching a low of 103.01. What gives?

A lot of things, apparently. ECB President Mario Draghi fired the first salvo by cutting the central bank’s interest rate from 1.25% to 1.00% in December, reversing the interest rate hikes made by former ECB Chief Jean Claude Trichet.

What hurt investor confidence more though, is “Super Mario’s” announcement that the ECB won’t be increasing its government bond purchases in the near future. And to think that market geeks have been calling for a “bazooka” from the ECB!

Last but definitely not the least, the new ECB head honcho also revealed that it’s illegal for the central bank to lend to the IMF to purchase government bonds, crushing hopes that the central bank will step up its game in helping the troubled euro zone economies. Tsk tsk. Looks like the holiday spirit hasn’t reached the euro region yet!

Little did the markets know that Draghi’s speech is not only the big news for the region yesterday. Around the late U.S. session Germany and the other European officials stirred up the markets by accidentally leaking a draft related to Merkozy’s recent plans.

You see, EU President Hermann Van Rompuy suggested that they could make a few speedy tweaks in the original EU Lisbon Treaty to accommodate Merkozy’s proposal, but Germany disagreed and said that a full-blown revision is needed. Not only that, Germany also opposed to the plans that the European Stability Mechanism (ESM) be given a banking license so that it could borrow from the ECB.

The lack of unity over the latest proposals escalated fears over the region’s financial stability, and took its toll on the euro and the other high-yielding assets.

At 7:00 am today we’ll get hold of Germany’s trade balance report, followed by France’ industrial production data at 7:45 am GMT. Of course, all eyes will be on the European Summit scheduled for the whole day today as the whole world watches just how dedicated the European officials are to saving their economies.

Don’t even think of missing these potential market-movers!

643

It looks like Santa Claus came in early for the euro bulls on Friday. After getting trampled on by the bears day after day, the euro finally whipped up a win against the dollar after it was reported that China could lend out a helping hand to debt-stricken EZ countries. EUR/USD ended the day 31 pips above its opening price at 1.3370.

The shared currency started to rally on news that that the PBOC would set up a 300 billion USD vehicle for investment funds in the U.S. and Europe. If this is true, it could make funding for struggling euro zone countries so much easier!

But don’t get too excited buying up euros just yet. Some market junkies warn that the positive vibes from the report could be over soon because of the lack of any real developments from the EU Summit. Sure, leaders from the region agreed to tougher budget rules and to lend the IMF 200 billion EUR to help bail out debt-stricken countries. However, there is a lot of skepticism that whatever politicians agreed on would be enough to convince the S&P not to downgrade any of the 15 EU countries that it placed on credit downgrade watch last Monday. So be sure you keep an ear out for updates from the credit rating agency!

Also, be on your toes for the reports we have on tap from the euro zone this week. On Tuesday, we’ll have the German and EZ ZEW Economic Sentiment reports on tap at 10:00 am GMT. Then on Thursday, manufacturing and services PMI reports from the region will be released. If you’re planning to go long on the euro, keep your fingers crossed for better-than-expected figures!

644

The euro was sold-off like hotcakes yesterday, no thanks to the disappointing aftermath following the European Summit. EUR/USD dropped to end the U.S. trading session at 1.3189, its lowest level since the first week of October.

The deterioration of the euro mainly rooted from the dissatisfaction of the market with regard to the European summit. Nothing concrete was put into action and Moody’s even added insult to injury when it said that it would review the ratings of [B]ALL[/B] European countries. That’s all European countries folks, not only the euro zone.

Market sentiment also took a hit when China’s trade balance for November declined more than expected. Instead of the surplus falling to 15.20 billion USD from 17.03 billion USD, it dropped to 14.52 billion USD.

Today, the big news release is the ZEW Economic Sentiment Survey. The market is expecting a reading of -60.3, slightly worse than the previous month’s -59.1. The actual result will be released at 10:00 am GMT.

645

Oh man, not again?! The euro must be feeling frustrated as it lost ground against its major counterparts yesterday. EUR/USD struggled to hold on to 1.3200 at first but ended up closing at 1.3029. EUR/JPY ended the day 113 pips down from its 102.74 open price.

ZEW economic sentiment data came in better than expected but it wasn’t enough to keep the euro afloat. The ZEW index for Germany climbed from -55.2 to -53.8 while the index for the euro zone rose from -59.1 to -54.1, both of which still indicated that investors and analysts were pessimistic with their economic outlook. Although the readings for December revealed that these market hotshots were less pessimistic than before, the euro seemed to ignore the data as it gave in to risk aversion.

Only the industrial production data is due from the euro zone today and this report isn’t expected to have a huge impact on euro pairs. The report could print a 0.1% uptick for November after slipping by 1.9% during the previous month. Keep an eye out for the actual figure due 10:00 am GMT because a weak reading could worsen the euro’s slide.

646

It appears that traders aren’t done bullying the euro just yet. Yesterday, due to the elevated levels of risk aversion, the euro took another hit and was sold-off against the currencies considered by the market as “safe havens.” By the end of the U.S. trading session, the euro found itself trading below 1.3000 versus the dollar.

EUR/USD’s break of 1.3000 was very significant as it shows how negative the market felt about the euro zone. The Italian bond auction may have been successful, but at the end of the day, euro zone’s debt problems remain.

The only economic data from euro zone released yesterday was the report on industrial production. It came in at -0.1%, opposite the 0.1% gain initially expected.

Today, the euro’s movement will probably be driven by the upcoming PMI surveys and euro zone consumer price index. The PMI surveys, which will start publishing at 8:30 am GMT, are generally expected to be lower than the previous month. Meanwhile, the consumer price index, which will print at 10:00 am GMT, is expected to show a 3.0% rise in prices, similar to the figure last month.

647

Easy there, brothas. After falling sharply for days in a row, the euro steadied against most of its major counterparts. EUR/USD ended up gaining by 32 pips, while EUR/JPY also edged 6 pips higher than its open price. What happened? Did Chuck Norris decide to buy the euro or something? Here are the details.

As it turned out, the euro region was dotted with better-than-expected reports that provided relief for the euro traders. For one thing, IMF chief Christine Lagarde called for other countries outside the euro region for help. In her speech, Lagarde stated that the euro zone cannot solve its problems alone.

Another possible reason for the optimism is the successful Spanish bond auctions. Spain sold 6.03 billion EUR worth of bonds yesterday, almost double the country’s initial target of 3.5 billion EUR.

And then, of course, there are also the region’s economic reports. Manufacturing and services PMI reports from France, Germany, and the whole euro zone printed better than analysts had expected with only the euro zone’s CPI and quarterly employment numbers missing expectations.

Will the euro go for two today? Only Draghi’s speech at 8:30 am GMT and the trade balance report at 10:00 am GMT is scheduled for release today, but make sure you keep close tabs on any news event that might affect risk sentiment!

648

Well, well, well… Look who was able to end the week with back-to-back wins! Despite weak trade balance data and the ongoing discussions on the European debt crisis, the euro traded higher last Friday. It posted its second win in a row against the dollar, rising 24 pips to end the week at 1.3037. Did we just witness a dead cat bounce or is this a legit reversal in the works?

To continue its recent rally, the euro will have to overcome quite a bit of negative feedback. For instance, just last Friday, Fitch Ratings dished out warnings for downgrades for six euro zone countries (France, Belgium, Spain, Slovenia, Italy, Ireland, and Cyprus).

Furthermore, the euro zone’s trade balance showed that the region’s exports have been taking a hit. Exports fell 0.7% in October, resulting in a trade surplus of 1.1 billion EUR, down from 2.7 billion EUR in September.

Let’s see if the euro zone will publish positive data for a change this week.

Today, its current account report is due for release at 9:00 am GMT. Look for its surplus of 0.5 billion EUR to turn into a deficit of 2.1 billion EUR. Hours after that, at 3:30 pm GMT, ECB President Draghi will testify before the European Parliament’s Economic and Monetary Committee. Catch his big speech if you wanna know what’s on the mind of the central bank head. He might just provide more info about the ECB’s role in the debt crisis!

The rest of the week will see light releases, but you may want to tune in tomorrow when German PPI, GfK German consumer climate, and German IFO business climate data are due to be published. Its been a while since Germany last published upbeat reports, so positive feedback from these releases could give the euro more room to recover.

649

Looks like we got a couple of good news reports from the euro region yesterday. So why exactly did the euro weaken against its major counterparts? EUR/USD capped the day 52 pips below its open price at 1.2995, while EUR/CHF extended its losses by another 32 pips to 1.2182. What gives?

A lot of mixed reports, apparently. Let’s start with the good news. In an emergency phone conference yesterday, the European leaders agreed to give an additional 150 billion EUR to the IMF to help the institution fight the region’s debt crisis. In addition, ECB head honcho Mario Draghi also reassured investors that the euro is “irreversible” and that a euro zone breakup is just “morbid speculation.”

Unfortunately, other investors aren’t convinced of those news reports. For one thing, the U.K. wasn’t too excited about making additional contributions to the IMF. Analysts suspect that without the U.K.’s help, European leaders would have a hard time meeting their 200 billion EUR target for the IMF’s additional funds.

The U.K. wasn’t the only one that rained on the euro’s parade. Before Draghi gave out his “irreversible” speech, the ECB first disappointed the markets by saying that the ECB can’t step up its bond-buying without breaking any laws.

Of course, let’s not forget that the death of North Korean leader Kim Jong-il as well as Fitch’s warning of a France downgrade last Friday had been spooking investors since the Asian session. Lastly, the economic reports from the region also fueled the aversion for the common currency.

The region’s current account report recorded a deficit of 7.5 billion EUR in October, a bit worse than the expected 2.1 billion EUR deficit and September’s 2.2 billion EUR current account surplus. Not only that, Italy’s trade balance report clocked in a deficit of 1.08 billion EUR in October, which disappointed expectations of only a 0.97 billion EUR deficit.

Will the economic reports from the euro region continue to disappoint today? Germany will take center stage today with its PPI and GfK consumer climate reports due at 7:00 am GMT, followed by the German If business climate data at 9:00 am GMT. The reports are expected to come in slightly lower than their previous figures, but huge disappointments can drag the euro further against its counterparts.

Don’t even think of missing these reports!

650

Way to go, euro! EUR/USD burst out of consolidation and rallied past the 1.3100 handle yesterday as traders’ risk sentiment improved. EUR/JPY had its share of gains as it closed 42 pips up from its 101.40 open price. What sparked the euro rally yesterday?

It turns out that the better than expected German IFO business climate figure was enough to turn traders’ frowns upside down as the reading climbed from 106.6 to 107.2 for December. This was a bit of surprise since market analysts thought the index would slip to 106.2 during the month. This shows that German business conditions remain stable and are expected to improve despite the fiscal problems in euro zone.

The German GfK consumer climate figure also came in slightly better than expected as it stayed at 5.6 instead of dropping a notch to 5.5. This report revealed that consumer confidence isn’t deteriorating in the country, providing support for the euro.

Better than expected Spanish bond auctions also gave the euro a boost yesterday as yields for 3-month and 6-month bills slid down, easing liquidity concerns in the nation.

There aren’t any top-tier reports due from the euro zone today so let’s see if the upbeat mood carries on for another day.

651

On the strength of improved risk appetite, the euro rallied early in the London session, as EUR/USD climbed all the way up to as high as 1.3197. Unfortunately, the gains were short-lived and the pair dropped all the way back down to end at 1.3025, down 53 pips from its opening price.

The euro rallied hard early, right before the ECB’s 3-year tender offer that would allow banks to borrow at 1%. This program was another method for the ECB to inject more stimulus into the economy, as it would allow them to purchase higher-yielding government bonds and help ease some pressure on the European banking sector.

However, the sentiment didn’t last too long, and soon, the euro along with other higher-yielding currencies came crashing down. One reason that may have caused this was some profit taking ahead of the Christmas holidays.

No hardcore data set to be released today, so we may see some subdued trading today. Good luck trading today my forex friends!

652

Unlike the movie trailer of The Hobbit, it looks like the ECB’s funding operation has left investors very little to be excited about. It was apparent in yesterday’s trading when EUR/USD topped at 1.3120 before tumbling down and closing the day 3 pips below its opening price at 1.3047.

Of course, with it only being a couple of days away from Christmas, most traders were probably already off their trading desks, not really paying attention to what’s happening in the markets.

Our forex calendar is blank for reports from the euro zone today. It would probably be a good idea to keep tabs on market sentiment to help you gauge which direction the euro is headed in today’s trading. Remember that the currency usually rallies when risk appetite is up.