Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
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On Friday, the Greek government issued the official invite to its bondholders to exchange the debt they are holding for brand new ones. Even though the process would require the bondholders to take a 75% loss, the market saw the event as positive, as it means that Greece would probably not default and would remain in the euro zone. EUR/USD, as a result, rallied strongly and closed the U.S. trading session 93 pips higher from its opening price.

Of course, this is good news but an invite remains an invite until it is acted upon. If less than 75% participate, then the bond swap not push through, and increase the likelihood (again) of Greece defaulting.

This week we’ve got a number of red flags on euro zone’s economic calendar.

The first major report you should keep an eye out for is the German Preliminary Consumer Price Index on Tuesday. The market expects it to print a 0.5% gain, opposite the 0.4% decrease seen the month before.

Then, on Wednesday, await the Consumer Price Index for the entire euro zone. The prediction is a 2.7% inflation rate for the headline report and a 1.8% inflation rate for the core.

On Thursday, the unemployment rate of the region is due. The unemployment rate is slated to have remained at 10.4%.

The last important report on the docket is the German retail sales on Friday. The consensus is a 0.5% rise, which is an improvement from the previous month’s small 0.1% increase.

With all the “positive” news that have been out of euro zone, better-than-expected results on the reports I just mentioned will likely end up pushing the euro even higher.

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Despite the German Parliamentary approving the Greek debt deal, the euro found itself giving back a decent chunk of its gains from last week. EUR/USD dropped 65 pips to close at 1.3397, while EUR/JPY closed at 107.93, well off its highs for the day and down 147 pips on the day.

So why did the euro choke like Lebron in the fourth quarter?

Well, one reason may have been that ratings agency Standard & Poor’s (S&P) decided to put Greece on “selective default”. With 5-year Greek credit default swap (CDS) spreads hitting their highest levels ever, it’s no surprise that S&P isn’t feeling too groovy about Greece.

Remember, the higher CDS spreads are, the higher the chances are of a “credit event” a.k.a a default, will occur. We’ll have to monitor this situation, as a default will most likely trigger another wave of risk aversion as fears of contagion could sweep the markets.

Moving on, markets players may also be a little wary of the ECB’s second long term refinancing operation (LTRO). The LTRO program, which was first introduced late last year, intends to spur lending between European banks, in hopes of injecting more liquidity into the markets and bringing down rising yields. The irony though is that the more that banks participate in the program, the more it could spark another round of risk aversion in the markets.

For today, we’ve got a couple of second tier reports coming out in the form of the GFK German consumer climate report (7:00 am GMT) and the German preliminary CPI (any time). Word is that consumer index rose from 5.9 to 6.1, which reflects improving sentiment. Meanwhile, month-on-month inflation is projected to have risen by 5.0% in February, which would be a complete reversal of the 0.4% decline we saw last month.

In any case, I don’t really expect these to move euro pairs too much. Instead, keep an eye out for those bond yields and any other developments surrounding the Greek debt saga.

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The euro was trading higher during the early part of the day, trading past 1.3450 against the dollar. Then all of a sudden, EUR/USD plunged like the neckline of J. Lo’s Oscars gown back down to its Asian session low of 1.3389. Good thing euro regained its composure and rallied to end the day 67 pips above its opening price at 1.3464.

Now, sit back, relax, and read up on some of the reasons why the euro was so volatile.

It seems that a lot of traders squared their euro shorts ahead of the ECB’s LTRO. Perhaps they thought that having a little optimism about the liquidity package would do them some good. It also helped that we got positive reports from the region yesterday.

Gfk’s German consumer climate report for February showed an improvement in financial confidence among consumers with the index coming in higher at 6.0 than its previous reading of 5.9. The country’s preliminary CPI report also printed higher at 0.7% than its December’s -0.4% reading and topped the consensus which was for a 0.5% uptick.

On the other hand, the Irish and German governments made new decisions yesterday that added more uncertainty to the region’s financial situation and caused the euro to spike down.

Irish Prime Minister Enda Kenny announced that Ireland will conduct a referendum on the EU’s fiscal treaty. This means that the Irish people will vote on whether or not to ratify the new set of budget plans for the country. Then, Germany’s Constitutional Court warned that appointing a committee to make euro zone aid-related decisions faster is unconstitutional.

But amazingly, the euro remained resilient. For how long though?

That will probably depend on the outcome of the ECB’s LTRO. A few market junkies speculate that if the total amount that EU banks bid is less than 250 billion EUR, it could boost risk appetite as this could mean that their balance sheets are healthy and that they don’t need much liquidity for support. Meanwhile, if demand falls around 500 billion to 750 billion, it may still be positive for the euro and equities as investors could get excited about the extra liquidity available in the markets.

However, if the amount falls around 1 trillion EUR, we could see the euro and stocks fall. Market participants would probably panic under this scenario because that figure is twice as much as the consensus and means that EU banks are in desperate need of cash.

With that said, be sure you’re on your toes for announcements regarding the LTRO, ayt? Also keep tabs on the top-tier reports we have scheduled on our forex calendar for the euro today as they could also affect the currency’s price action.

At 7:45 am GMT, the French consumer spending report for January will be released and it is anticipated to come in at 0.3%. Then at 8:55 am GMT, Germany’s unemployment change data for January is seen to print a decline of 5,000 in the number of unemployed people in the country.

We’ll then get dibs on the inflation pressures in the region with the EZ CPI report for January. On an annual basis, the headline CPI figure is eyed at 2.7%. On the other hand, the core reading which excludes volatile items is estimated at 1.8%.

Watch out for better-than-expected figures as they may provide the euro with support!

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Geronimooo!!! After days of speculation, euro traders finally got the price action that they’ve been waiting for. Unfortunately, the euro train headed south against the dollar and the pound! EUR/USD fell sharply to 1.3325 its closing price, while EUR/GBP also suffered a 96-pip blow at .8373. What gives?

If you’re looking for the source of the action, look no further than the ECB and the Fed. First, the ECB’s long-term refinancing operation (LTRO) yesterday revealed that around 800 banks participated to bid for 529.5 billion EUR worth of liquidity.

The number isn’t too far from markets’ expectations, although the number of banks needing liquidity did cause a bit of concern among investors.

Big Ben also took part in the currency hoopla yesterday. He not only indicated that employment numbers are recovering faster than anticipated, he also gave few signals that the Fed is launching a QE3 anytime soon. The speech highlighted the difference between the ECB and the Fed’s recent balace sheet strategies, which weighed on the euro.

Now that we got the LTRO over with, what’s the next highlight for the euro zone?

For starters, at 9:00 am GMT today we’ll get hold of the euro region’s final manufacturing PMI and Italy’s unemployment rate, while the flash CPI estimate and the euro zone’s jobless rate will be released at 10:00 am GMT.

Of course, we can’t forget about Greece’s bailout! Market junkies will be glued to their seats as the International Swaps and Derivatives Association ([I]ISDA[/I]) decides on whether or not a credit event is triggered in the country.

Word on the hood is that ISDA is waiting for the results of Greece’s latest bond participation program to make any calls, so keep an eye out for any reports on this, aight?

Also under the spotlight today is the EU Summit in Brussels where the euro zone’s financial hotshots are scheduled to meet. Many say that like ISDA, EU officials are also on a wait-and-see mode before making any decisions about Greece.

Still, we might hear some interesting sentiments from these officials, so make sure you keep your eyes glued to the tube!

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And the onslaught continued as the euro bled out pips for another day. EUR/USD ended yesterday’s trading 22 pips below its opening price at 1.3306. Meanwhile, against the yen, it gave up 25 pips as EUR/JPY closed at 107.92.

But don’t fret, euro bulls! On a slightly better note, the currency’s losses yesterday were smaller compared to those it incurred on Wednesday.

Word around the hood is that the lack of any updates regarding the Greek bond swaps left most EUR pairs in consolidation. You see, the EU announced that it will hold off its final say on Greece’s second bailout until the bond swaps results are out.

It also didn’t help that yesterday’s roster of reports from the euro zone was mixed. While we saw a better-than-expected EZ CPI report for February at 2.7% (versus the 2.6% consensus) which was bullish for the euro, the unemployment rate for the region trickled higher at 10.7% in January and disappointed the 10.4% forecast. Yikes!

For today’s trading, I think it’s important to keep in mind that until we see that there have been enough investors who willingly participated in the bond swaps, the euro’s gains will probably be limited. So be sure to keep an ear out for updates, all right?

Also keep tabs on the reports we have on tap from the euro zone as they may affect the currency’s price action too. Germany will release its data on consumer spending for January at 7:00 am GMT. It is anticipated to print at 0.5%. If it comes in better than expected though, we may just see the euro trade a tad higher!

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The euro suffered another defeat last Friday as Euro zone finance ministers decided to withhold a little over half of Greece’s 130 billion EUR bailout fund. EUR/USD ended the day 1.3205, 101 pips lower from its opening price during the Asian trading session.

According to news reports, finance ministers delayed the release of the funds because they weren’t quite assured that Greece would implement the reforms and austerity measures previously agreed upon.

Economic data released were mixed. The German retail sales report failed to meet expectations and came out with a 1.6% decline instead of a 0.5% increase. On the other hand, the euro zone PPI showed a 0.7% gain, slightly higher than the 0.6% rise initially predicted.

This week, we’ve got the European Central Bank (ECB)'s interest rate decision to worry about. The announcement will come on Thursday, and the market widely expects that the central bank will keep rates unchanged at 1.00%. This means that the accompanying statement will be the highlight.

But before that, we’ve got a couple of mid-tier data coming our way.

The first report, the euro zone Final Services PMI, will be released at 9:00 am GMT. It is slated to show a reading of 49.5. Thirty minutes after, the Sentix Investor Confidence Survey will be published. The forecast is -5.4, which, while negative, is a big improvement from the previous month’s -11.1. Finally, at 10:00 am GMT, euro zone’s retail sales report will print. A flat reading is expected, which is slightly higher than the last month’s 0.3% decline.

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After their poor performance last Friday, the euro bulls stepped up their game yesterday and managed to recover some of their losses. EUR/USD, as a result, closed the day at 1.3222, 30 pips higher from its opening price during the Asian trading session.

Economic data that printed were mixed. On the one hand, the retail sales report came in better than expected and printed a 0.3% gain versus the 0.0% forecast. But on the other hand, euro zone’s final services PMI failed to meet forecast and showed a 48.8 figure instead of the 49.5 consensus.

The only report scheduled for release today is the revision on euro zone’s fourth quarter GDP report. Don’t expect the report to have a strong impact on price action though, as no revision is expected on the -0.3% growth rate.

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Tuesday’s trading session was dominated by risk aversion again with the euro weaker against the safe haven Greenback. It fell almost the entire day and closed the U.S. session more than 100 pips lower from its opening price.

The move, rather than the result of a single catalyst, was the effect of a combination of not-so-good news. It all started Bernanke’s testimony when he smashed the market’s expectation of another round of quantitative easing in the near future.

It was then followed by the decision of European Finance Ministers to withhold part the bailout funds to Greece on Friday. And lastly, risk aversion was heightened further when China’s Premier Wen Jiabao went on the wires two days ago saying that China’s growth would taper down.

Today, only the report on German Factory Orders is due. It is expected to show a 0.6% rise, approximately a third of the previous month’s 1.7% increase. The negative forecast could push the euro lower once again for the upcoming trading session.

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Euro traders are getting ready to rumbleeeee!!! The euro pared back some of its losses yesterday as traders took profits on their euro shorts ahead of the major Greek PSI announcement today. EUR/USD inched 31 pips higher to 1.3147, while EUR/JPY climbed by 68 pips to 106.72.

Too bad that the only piece of economic data released failed to fuel the euro rally. Germany’s factory orders showed a 2.7% decline in January, which is a lot weaker than the 0.6% growth that analysts had been expecting.

But that was yesterday. Today all eyes will be on the euro region like Apple fan boys are to “the new iPad” announcement as we get hold of some major economic data. The region will warm up at 7:45 am GMT when France releases its trade balance data, which will be followed by the German industrial production report at 11:00 am GMT.

Greece will turn up the heat considerably at 8:00 pm GMT when the deadline for the bond participation rate is due. Market geeks are saying that a participation rate below 75% might cause a sharp EUR/USD selloff as it would trigger a credit event and probably push Greece to a disorderly default, while a participation rate of 76% to 90% might also cause volatility in the charts. Make sure you don’t miss this one, aight?

At 12:45 pm GMT the ECB will take center stage with its interest rate decision. No change is expected from the central bank’s current 1.00% cash rate, but market players are saying that ECB head honcho Mario Draghi might take steps to calm down volatility after the Greek PSI details are revealed.

Stick around to trade these potential chart catalysts, kids!

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Make no mistake about it, the euro is alive and kicking! It rose 118 pips against the dollar and rallied 153 pips against the yen as the markets were relieved to see reports that showed that more of Greece’s creditors will exchange their old bonds for new ones.

The bond-swap deal attracted a lot of of interest, and some reports say that the take-up on the offer was around 95% already just an hour before the offer closed! Remember, a participation rate of over 90% would mean that the collective action clauses won’t be triggered, so this is definitely good news. Still, we’ll have to wait until 6:00 am GMT for the results to be officially released. Keep your fingers crossed, fellas!

In other news, the ECB rate statement went pretty smoothly for the euro, thanks to ECB President Mario Draghi’s supportive words. He reiterated that he and his gang have been seeing signs of stabilization in the euro zone, and added that they have raised their inflation forecasts (from 1.5-2.5% to 2.1-2.7% for 2012) as they expect inflation to stay above 2% in 2012… in other words, more reason NOT to ease!

Also, Draghi gave himself a pat on the back for the LTRO program, which he claims has helped stabilize the markets and boost the euro. Talk about tooting your own horn! Now, the ECB wants to wait and see how the LTRO will further affect the economy before it steps in with additional easing measures.

No tier 1 economic reports on tap today… but remember, the bond-swap offer results are due at 6:00 am GMT! Don’t miss it! If it confirms that the participation rate exceeded 90%, then the euro could be in for more gains!

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Greece is saved! Or is it? After activating its collective action clauses, Greece announced last Friday that investors of 95.7% of Greece’s privately-held bonds are willing to participate in the swap. EU leaders sounded pretty happy about it too, since they give their go signal on Greece’s second bailout package. But is it enough to boost the euro at the end of the day?

Not if you take look at last Friday’s price action. Strong job reports from the U.S. dragged EUR/USD further to close 152 pips below its open price, while EUR/JPY registered a 17-pip fall to 108.09. Apparently, many market players believe that Greece activating its CACs is a credit event that places the country in default.

For one, the International Swaps and Derivatives Association (ISDA) has already dubbed the debt swap as a “credit event,” triggering insurance payments on Greek debt. Credit rating agency Moody’s also declared Greece in default on its debt, while Fitch ratings cut its long-term foreign and local currency issuer default ratings to “restricted default.” Yikes!

Still, the euro’s muted reaction to the downgrades and the EU leaders’ promise of another bailout package signal that Greece will probably step out of the spotlight in the next couple of days. For now, market junkies will look at other EU nations for signs of possible contagion.

While we’re waiting for word from the EU officials, why don’t you take a look at the economic reports hitting our way this week? Only Germany’s wholesale price index is scheduled for release today at 7:00 am GMT, but tomorrow we’ll probably see more action when the euro zone and German ZEW economic sentiment reports are released at 10:00 am GMT, followed by a speech by ECB’s Mario Draghi at 12:30 pm GMT.

On Wednesday at 10:00 am GMT we’ll see the region’s CPI and industrial production numbers, which are all expected to print better than their previous readings. Then, on Thursday at 9:00 am GMT we’ll get hold of the ECB monthly bulletin, followed by the quarterly employment change report at 10:00 am GMT. Lastly, we’ll see Italy and the euro zone’s trade balance reports on Friday at 9:00 am and 10:00 am GMT, respectively.

Make sure you keep close tabs on these reports, aight?

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Despite resurfacing concerns about debt contagion, traders gave the euro some lovin’ as the shared currency edged slightly higher against its major counterparts yesterday. EUR/USD managed to close nearly 50 pips up from its 1.3107 open price while EUR/JPY ended the day at 18 pips above the 108.00 handle.

Taking a look at bond yields in the euro zone reveals that investors are getting goosebumps about European bonds. It seems that investors are now closely watching the bond yields of the rest of the PIIGS nations, worrying that they might come close to a default as well.

As for economic data, only the German wholesale price index was released yesterday and it showed a 1.0% increase in price levels for February, slightly lower than the previous month’s 1.2% rise.

Today, Germany is set to release its ZEW economic sentiment figure for March, which is expected to climb from 5.4 to 10.6. If the actual figure meets or beats expectations, it could boost the euro a bit higher against its counterparts. Otherwise, if it comes in significantly worse than expected, the euro might be forced to return its recent gains. Keep an eye out for the release at 10:00 am GMT.

Another thing to watch out for today is ECB President Draghi’s speech at 11:30 am GMT. The central bank head is set to talk about “The Challenges of Competitiveness” but he might drop a few hints on what the ECB has in store when it comes to future policy decisions. Stay tuned!

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Splat! Nope, that wasn’t the sound of Robopip crashing his pod again, but of the euro falling flat on its face in yesterday’s trading rounds! EUR/USD dropped 71 pips to finish at 1.3084, marking the first time in a month that it’s closed below the 1.3100 handle.

Despite the release of better-than-expected ZEW economic sentiment reports (German: 22.3 vs 10.6; euro zone: 11.0 vs 3.8), the euro failed to make much headway as traders decided to take their chances with the dollar. This was a little unusual, as higher yielding assets have moved in tandem recently. However, that wasn’t the case yesterday, as equities rallied, but the euro did not.

As for the Greek debt saga, don’t think that Greece is off the hook just yet. Word out of the IMF is that it will only be releasing 18 billion EUR in financial aid, with future bailout contributions dependent on whether European countries adhere to strict fiscal targets.

For today, we’ve got the consumer price index and industrial production figures due at 10:00 am GMT. Inflation is expected to print at 2.7%, right in line with what it was at last month. If this comes in lower-than-expected, it could give the ECB more room to cut rates should it choose to do so.

Meanwhile, industrial production is projected to have picked up by 0.8% last January, which would be a nice turnaround from the 1.1% decline we saw in December. If this comes in to show even higher growth, it could give the euro a small boost to help it recover from yesterday’s beating.

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The euro extended its losses against the Greenback as EUR/USD edged closer to the 1.3000 handle. EUR/JPY, on the other hand, chalked up another day in gains as it closed 12 pips above the 109.00 mark. Will the euro be able to find a clearer direction today?

Euro zone came up with weaker than expected core CPI for February as the figure came in at 1.5%, just below the 1.6% consensus. The headline figure came in line with expectations as it clocked in a 2.7% year-over-year increase in price levels.

In contrast, the industrial production report came in significantly worse than expected as it printed a mere 0.2% uptick instead of the predicted 0.8% rise for January. This was barely enough to make up for the drastic 1.1% decline seen last December as factories in the euro zone are still struggling to get back on their feet.

Only the ECB monthly bulletin is on tap for the euro zone today and this is set for release at 9:00 am GMT. This should show the data on which the central bank based its latest monetary policy decision so it might still be worth looking at even though it isn’t expected to have a huge impact on price action.

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Don’t look now, but the euro finally snapped its string of losses against its counterparts! EUR/USD found support at the 1.3000 area and ended the day at 1.3080, while EUR/JPY also recovered from its 108.59 intraday low and closed at 109.32. Booyah!

Only the ECB monthly bulletin and the region’s quarterly employment data were released yesterday, so investors were able to focus on other headlines in the euro zone.

In its monthly bulletin, the ECB stated that it expects growth to gradually recover, although tensions in the debt market could still hamper economic activity. Right now the central bank expects growth in the range of -0.5% to 0.3% in 2012 and of 0.0% to 0.2% in 2013, down from projections of -0.4% to 1.0% growth in 2012 and of 0.3% to 2.3% in 2013. Meanwhile, employment change in the region came in at -0.2%, which is in line with analysts’ expectations.

It might have also helped the euro that both France and Spain’s bond auctions went better than expected. Spain’s 3-year bonds have an average yield of 2.4%, down from the previous auction’s 3% average. France also raised 10 billion EUR with its five-year bonds clocking in at 1.78% against the previous auction’s 1.93% yield.

The icing on the euro’s cake yesterday was the IMF’s decision to approve a 28-billion EUR funding for Greece. Only 1.65 billion EUR is scheduled for immediate release, but the IMF’s participation was enough to fuel the euro rally.

Today we only have Italy’s trade balance report at 9:00 am GMT and the region’s own trade data at 10:00 am GMT, so make sure you keep an eye out for any report that might affect risk appetite!

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The euro pulled off a last-minute hustle in Friday’s trading as it posted wins against most of its counterparts. EUR/USD bounced from support at 1.3050 to end the day 95 pips above its opening price at 1.3175. Meanwhile, EUR/JPY closed at 109.94 after opening at 109.32.

While rumors about increasing the EFSF and ESM provided the euro with some support on the charts, be wary not to get too excited with its recent rally! A few market junkies warn that what we saw on Friday could nothing be more than just short covering and profit-taking.

We’d probably need to see a big catalyst from Europe before we see the euro extend its gains. Perhaps the service and manufacturing PMI reports can do the trick! But those won’t be released until Thursday, so until then, keep tabs on the EZ current account report due later at 9:00 am GMT. If the figure for January comes in higher than 3.3 billion EUR, we may just see euro pairs trade higher!

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Om nom nom nom! The market’s appetite for the euro was extremely strong yesterday as they bought it up in massive quantities. With help from better-than-expected current account data, EUR/USD managed to chalk up a third straight day of gains as it climbed 62 pips to 1.3236.

According to the euro zone’s latest release, the region’s current account surplus grew from 3.4 to 4.5 billion EUR in January. That’s its biggest surplus in 5 years yo! As a result, it delivered a pleasant upside surprise as it beat forecasts which called for the surplus to narrow down to 3.3 billion EUR. From the way the surplus for goods and services picked up strongly, it seems as though we’re seeing a much healthier demand for euro zone products.

Euro bulls may have more to celebrate if the German PPI comes in better than expected later at 7:00 am GMT. Look for the report to show a 0.5% increase in the prices of goods sold by manufacturers February, slightly lower than the 0.6% uptick we saw in January.

Also, keep in mind that Greece and Spain are set to hold bond auctions today. Like always, be sure to catch the results because the markets have a tendency to use them as measuring sticks for investor confidence. Good luck and happy trading to all!

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Talk about resiliency! Despite the strong dollar move yesterday, the euro managed to keep the boat steady. EUR/USD stuck within range and eventually closed 1.3225, down just 14 pips from its opening price. Meanwhile, EUR/JPY edged another 37 pips higher to finish at 110.71, marking the 6[SUP]th[/SUP] day in a row that the pair has ended higher.

The only piece of data that was released yesterday was the German producer price index, which came in slightly worse-than-expected. German producers paid 0.4% more for their raw materials, which was just below the anticipated 0.5% mark. Remember that any additional costs that producers incur is normally passed on to consumers, so if producer prices are falling, it could mean that inflation remains subdued.

In other news, the somewhat successful Spanish and Greek bond auctions reveal that investors aren’t afraid to place their bets on European assets. Do investors feel the same about Portuguese bonds? We’ll find out today when Portugal auctions off some short-term bonds.

We don’t have any hard hitting reports lined up for today, but make sure you keep an eye out for risk sentiment. As my momma always used to say, risk sentiment can always change on a dime, so be sure to practice good risk management techniques!

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Yesterday, we saw a chink in the euro’s armor as risk aversion managed to make its way into the market. EUR/USD ended the day at 1.3216, 9 pips lower from its opening price during the Asian session.

The euro’s weakness was the result of things happening external to the euro zone rather than internal. Some Australian miners commented yesterday that Chinese of steel was probably going to weaken this year, which could hurt global growth.

No major economic reports were released in the euro zone yesterday, but today we’ll be seeing some important PMI figures. At 8:00 am GMT, manufacturing and services PMIs will start printing from all over the euro zone. The market expects the manufacturing PMI to increase to 49.6 from 49.0 and the services PMI to improve to 49.3 from last month’s revised down 48.8.

Also watch out for European Central Bank (ECB) Mario Draghi’s speech at 4:00 pm GMT. He’ll be holding a press conference at the European Systemic Board Meeting in Frankfurt to talk about the problems currently plaguing the euro zone.

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KABOOM! Yes, that was a cannon you heard, but no, it wasn’t due to the death of a tribute! Rather, it was the euro that got slaughtered in yesterday’s trading games! EUR/JPY dropped 123 pips to finish at 108.95, while EUR/USD fell to as low as 1.3134 before closing at 1.3201.

Generally weaker-than-expected purchasing manager indexes helped trigger the bloodbath in euro pairs yesterday. French, German, and euro zone wide PMIs all printed in the red, with the manufacturing PMIs dipping back below the key 50.0 level. Remember, 50.0 is the score that separates expansion from contraction, so scores below this level indicate that manufacturing activity in the euro zone is slowing down.

Industrial new orders figures also disappointed, as they dropped by 2.3% last month, slightly worse than the anticipated 2.0% decline.

The poor data in combination with other dismal reports across the globe helped trigger a quick sell-off starting in the London session. The question is, can the euro bounce back? Or will the pain continue for district euro?

No hard data lined up on our calendar today, but make sure you keep a close eye out on other markets. If it seems that equities and commodities are selling off, it may be time to load up on your short euro positions!