Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
103

Hawkish comments from ECB officials buoyed the EURUSD above the 1.5000 mark. As the pair inched close to its yearly high, it fell sharply as the USD rallied on investors’ profit-taking.

ECB member Axel Weber highlighted the improved outlook for the euro zone economy. Although he says that its still too early to withdraw the ECB’s easing programs, the central bank must also be careful not to miss the right time for exit. Meanwhile, Nout Wellink, another ECB official, noted signs of stabilization in the Dutch economy, hinting that excess liquidity will be mopped up soon.

We’ll see whether these upbeat remarks about the euro zone’s economy are echoed in the actual economic figures. Euro zone is set to report its industrial production data at 10:00 am GMT today. After posting a 0.9% increase in August, industrial production is projected to be up by 0.6% in September. If the actual reading beats the consensus, then the EURUSD might find itself back above the 1.5000 handle.

Later on, ECB President Jean-Claude Trichet is set to give a speech entitled “The Transatlantic Marketplace: Challenges and Opportunities Beyond 2009” at 7:00 pm GMT. Would he talk about the timing of future rate hikes? Better stay tuned!

104

In a single day the EURUSD erased most of its gains that it had for the week. The fiber fell to low of 1.4821 before closing at 1.4840 in yesterday’s price action.

The ECB’s monthly bulletin was published yesterday. Here, the ECB noted that the euro zone’s economy is seen to improve during the second half of this year. The ECB said that improvements will be gradual. It, however, remained its cautious stance by stating that the euro zone’s economic outlook is still subject to uncertainties.

Meanwhile, euro zone’s industrial production rose by 0.3% in September which is its fifth consecutive monthly gain as the demand for steel, machineries, and the like increased with a recovering global economy. During the same period, production of capital goods such as equipments advanced by 1.7%.

In spite of these ‘positive’ reports, the EUR still dropped against the USD.

The euro zone will take center stage today with the release of Germany’s and the euro zone’s third quarter GDP reports at 7:00 am GMT and 9:00 am GMT, respectively. Germany carries a lot of weight in the euro zone’s economy since it makes up about a third of its output. With Germany’s economy expected to have expanded again by 0.8% after posting a 0.3% growth during the second quarter, it might just be enough to pull the euro zone out of recession. The euro zone is seen to have logged a positive growth for the first time since the second quarter of 2008 with its GDP anticipated to have grown by 0.6% after contracting by 0.2% in the previous quarter. GDP is a broad measure of economic growth. Hence, any increase in this account could reflect positively on the EUR as well.

Professor Forex Gump wrote an article about the upcoming GDP releases. Check it out by clicking on this link: [U]Third Quarter’s The Charm for Euro Zone?
[/U]

105

Third time was indeed the charm for euro zone as its GDP report last Friday showed expansion. According to the report, euro zone’s economy expanded 0.4% during the third quarter of 2009 after contracting 0.2% between April and July.

  Although the expansion posted was slower than expected, the results eventually proved to be beneficial for the euro as it managed to gain back some of its losses versus the dollar when the US session went rolling along. Digging deeper into the report would reveal that the surge in German and French exports was able to make up for weak consumer spending. 

  Euro zone’s economic cupboard is relatively light this week as only a bunch of medium-impact economic reports are due.

  Today, expect to see the [consumer price index](http://www.babypips.com/forexpedia/Consumer_Price_Index) at 10:00 am GMT. The prediction is that the average price level of goods and services fell in October by 0.1% after falling by the same percentage in September. However, the core report which excludes the prices of energy, food and other volatile items in its computation is expected to show a rise of 1.2%.

  On Wednesday, the euro zone’s   [current account balance](http://www.babypips.com/forexpedia/Current_Account_Balance) will be released at 9:00 am GMT. The estimate is that the current account balance report would show a €600 million surplus in October, up the €1.3 billion deficit seen the month prior. 

  Lastly, on Friday, the German producer price index is due at 7:00 am GMT. The report, which measures the monthly change in price of wares sold by manufacturers, would probably show that prices in October increased 0.1%.
106

The EURUSD went for a wild ride yesterday, jumping up and down following the comments of US Fed Chairman Ben Bernanke. Still, overall sentiment pushed the EURUSD higher, but not enough to close above the 1.5000 handle.

Traders jumped all over Bernanke’s comments, as he said that the US Fed wanted a strong dollar. This caused some major dollar buying, which made the EURUSD drop dramatically. However, Bernanke also expressed some caution, saying that the economy was still far from recovery. At the end of the day, the EUR (along with other majors) came out victorious.

ECBmember Axel Weber expressed the same yesterday, saying that even though governments all over the world were starting to stabilize their economies, sustainable recovery has yet to be accomplished. He said that all potential risks must be studied and that exit strategies must be formulated starting now. Weber said that if the ECB withdraws stimulus at the wrong time, it may put the economy in more danger.

Inflation data was released yesterday, indicating that consumer prices have fallen by 0.1% from levels a year ago. At the same time, the core consumer price index – which does not include prices of volatile items – shows that prices have risen by 1.2% from last year. Take note that the ECB keeps their eye on core data and that the ECB’s target inflation is at 2.0%. The ECB has been keeping interest rates at low levels in order to stimulate the economy, knowing that inflation is not a concern right now. However, once we see inflation start to pick up, the ECB may have to re-evaluate how low they want to keep interest rates at.

Today, at 10:00 am GMT, euro zone trade balance figures will be released. The report shouldn’t have too big an impact on the markets, given that German and French data have been previously released. It is expected that the trade deficit has shrunk to €900 million in September after being at € 1 billion in August.

Tomorrow, we could see more spikes in EUR trading, as ECB president Jean Claude Trichet will be speaking at 8:40 am GMT. After Bernanke’s comments on a strong dollar this past week, let’s see what Trichet has to say about this.

107

Despite an impressive rise in exports, the EURUSD took a sharp dive from a high of 1.5016 all the way down to an intraday low of 1.4808. Their trade deficit actually turned into a surplus as exports increased at their fastest pace in 20 months yet the pair slid by more than 200 pips. What gives?

What prevented the EURUSD from rallying based on stronger than expected trade data were ECB President Jean-Claude Trichet’s comments supporting a stronger USD. In his speech yesterday, he echoed Federal Reserve Chairman Ben Bernanke’s statement concerning a strong USD policy. Judging from the recent trade figures, the strength of the EUR doesn’t seem to pose an immediate threat to the euro zone economy but Trichet appears intent to talk the EUR down. He also mentioned that the EUR is not a reserve currency meant to replace the USD.

Today, Trichet is scheduled to give another speech at 8:40 am GMT. He is due to speak in front of the European Insurance and Occupational Pensions Supervisors Committee in Frankfurt. Would we hear another round of pro-USD comments?

Also due today is the euro zone’s current account balance. Just like their trade balance, the current account deficit is expected to turn into a surplus this October. In September, the current account deficit amounted to 1.3 billion EUR. The consensus is a surplus of 0.6 billion EUR for October and we’ll see whether the actual figure hits the mark by 9:00 am GMT.

108

The EURUSD went silent for a while as it just consolidated between the 1.5000 resistance and 1.4808 for the past couple of days. It may be poised for a breakout soon. The question, though, is where? Break up? Or break down?

ECB President Jean-Claude Trichet spoke again yesterday at an awards ceremony in Frankfurt. In his speech, he reiterated the importance of a strong dollar. Despite his comments, the USD still lost a bit of support. The reason for this could be that the market already ‘priced in’ his views given his similar statements that he made just the other day.

Meanwhile, euro zone’s current account (CA) balance unexpectedly slipped in September. Euro zone’s CA fell from €600 million to -€5.4 billion. Its impact on the EUR’s short term valuation was, however, muted since the trade balance, which is a component of CA, was already released the day before. Euro zone’s trade balance rose from €2.2 billion to €6.8 billion given the 5.5% jump in exports.

Today (4:00 pm GMT), ECB President Jean-Claude Trichet will again deliver a testimony at the Euro50 Group Conference, in Paris. His speech will focus more monetary policies so volatility could be seen if he drops some clues regarding the bank’s probable future monetary actions.

109

The EURUSD pair fell down a couple of steps in yesterday’s session as a wave of risk aversion hit the currency markets once again. It ended the US trading session at 1.4923, almost 100 pips lower from its Asian opening price.

  It seems that concerns of a double-dip recession are surfacing again as President Obama warned the public that the increasing US debt could put downward pressure on growth. Add this to the fact that [unemployment](http://www.babypips.com/forexpedia/Unemployment_Rate) in the US and all over the world is still awfully high and generally rising. However, some analysts believe that the move yesterday was simply caused by investors taking profits off their short dollar positions. 

  On the docket today is Germany’s producer price index at 7:00 am GMT. The producer price index measures the monthly percentage change of the prices of goods sold by manufacturers. The expectation is that prices rose 0.1% October after falling 0.5% the month prior. Although not as closely watched as the CPI, the PPI could provide some clues about future inflation. Businesses tend to pass on additional costs they incur in operations to consumers.

  Also watch out for another talk by ECB President [Jean-Claude Trichet](http://www.babypips.com/forexpedia/Jean-Claude_Trichet) later today. He’ll be doing a speech titled “After the Crisis” in Frankfurt at 10:30 am GMT. That’s a pretty bold claim, considering economic recovery is not yet certain. I guess we’ll just have to hear out what he’s about to say! If he starts mentioning currencies, expect to see some wild volatility swings in the euro’s price action.
110

The euro fell in Friday’s trading as stocks markets reacted to comments made by European Central Board President Jean-Claude Trichet. Coupled with continued dollar buying, this sent the EURUSD tumbling down to as low as 1.4800 and ultimately closing at 1.4862. Is the 1.5000 handle now a distant dream?

Last Friday, the ECB announced that they central bank would begin to withdraw economic stimulus measures in order to avoid a strong rise in inflation in the future. According to Trichet, not all the programs that are currently in place are needed as much as in the past. Also, the ECB plans to place more regulation and stricter rules regarding which banks can take out loans from the ECB.

These comments hurt European stocks, which fell for the 4th straight day. The reason for this is that tighter monetary policy standards normally leads to smaller profits. This in turn, jolted the markets on both sides of the Atlantic. I’ll be keeping an eye out on these developments as the ECB keeps on with their wait-and-see approach. I’m intrigued to see what happens if we see more signs of economic weakness and that the ECB suddenly thinks that they withdrew stimulus too early… Double dipping (recession) any one?

Also released on Friday was Germany’s producer price index. The report revealed that prices remained unchanged from September to October. On a yearly basis, producer prices have fallen by 7.5%.

It’s going to be a jam-packed week, as a slew of data is on deck from the euro zone. The rock-fest starts today, as we start off with purchasing manager indices from Germany, France and the euro zone. The PMI reports are all expected to show small improvements from last month’s data – could this take the euro out of its recent slump?

Tomorrow, the German Ifo business climate index is scheduled for release at 9:00 am GMT. The index – which is based on surveys given out to manufacturers, wholesalers, and retailers – is expected to print a reading of 92.6, up from October’s reading of 91.9.

Also, don’t forget that the German Final GDP report is due at 7:00 am GMT tomorrow. No revisions are expected to be made to the previous report, which showed that Germany posted growth of 0.7% last quarter.

111

The EUR managed to edge higher against the safe-havens USD and JPY yesterday as PMI figures from euro zone came in strong. The EURUSD pair zoomed all the way up to retest the 1.5000 handle but the upward momentum cooled towards the end of the US session.

Except for the French manufacturing PMI, all the PMI readings released yesterday were right on target. French services PMI even beat the consensus as it surged from 57.7 to 60.4 in November. Manufacturing PMI from France, on the other hand, slid from 55.6 to 54.2 instead of simply dropping down a notch to 55.5 as expected. Both manufacturing and services PMI from Germany printed improvements over their October readings. Euro zone manufacturing and services PMI climbed as well.

ECB President Jean-Claude Trichet’s speech, which was widely expected to contain his usual pro-USD comments, was unable to drag the EURUSD down. Increased risk appetite may have provided support for the EURUSD pair yesterday as the US reported a strong rise in existing home sales. The actual figure blew right past the consensus of 5.71 million and landed at 6.10 million for the month of October.

Today, a bunch of high-profile reports due from the euro zone could stir up more volatility in the EUR pairs. Data on French consumer spending, which is projected to print a modest 0.5% uptick, is due at 7:50 am GMT. At 9:00 am GMT, the German Ifo business climate report will be released. The index of business conditions is slated to climb from 91.9 to 92.6 this month, providing further support for the EUR. Industrial new orders due 10:00 am GMT are expected to be up by 0.7% in September after rising by 2.0% in the previous month. Lastly, Belgium’s NBB business climate index might edge up from -14.2 to -11.3 in November. The actual figure is due 2:00 pm GMT.

With an entire day peppered with economic reports from the euro zone, price action of EUR pairs is bound to be extra rocky. Add to that a sprinkling of high-impact US economic reports and we might be in for a very volatile trading day. Be careful out there!

112

It’s a good thing that the EUR was still able to close mixed against the dollar despite the downward revision in the third quarter GDP of the US. The EURUSD fell to a low of 1.4888 during the start of the euro session. Though, it managed to make a sharp turn quickly after to close higher at 1.4965.

Both French consumer spending in October and German Ifo business climate in November came in with better-than-expected results. French consumer spending rose 1.1% versus the 0.5% consensus. The German Ifo business climate index likewise trumped the 92.6 estimate with a 93.9 score. On top of these, industrial new orders for the entire euro zone also posted a 1.5% growth in September, better than the 0.7% projection.

These results buoyed the EUR until the US 3Q GDP was released. The EURUSD reversed its course when the US’s GDP for the third quarter was revised down to 2.8% from 3.5% due to a widening trade deficit.

Today, data from the German GfK consumer confidence survey for the month of December will be due at 7:00 am GMT. The index is seen to rise to 4.2 from 4.0. An increase in financial confidence could reflect positively on the euro zone since it can be used as a leading indicator of consumer spending. As we know, consumer spending makes up a huge chunk (about 57%) of the euro zone’s economic activity. Hence, a rise in the figure could also be bullish for the EUR.

113

Just like its fellow European currencies, the Euro was able to take advantage of the dollar’s weakness yesterday. It soared all the way to a high of 1.5146 and closed right there!

Data released yesterday didn’t do quite as well though. The Gfk German Consumer Climate survey for the month printed a reading of 3.7, lower than both the forecast of 4.2 and October’s reading of 4.0. The consumer climate survey basically asks around 2,000 Europeans on their take on the economy… A rising reading means consumers are getting more confident about the economy. What does that mean? Well, if people are more confident, they feel more secure about their jobs and this could encourage them to spend more. If consumers start to spend more, businesses get more profits, which could stimulate the economy and help it grow!

Okay, moving on… The important report to watch out on today’s economic cupboard is Germany’s preliminary CPI. The estimate is a flat reading for November, lower than last month’s 0.1% growth… This means that the prices of goods and services purchased by the average Joe didn’t rise or fall at all. If the actual figure comes in higher than forecast, the euro could gain some more mojo and rally further against the dollar.

114

It was a long, long day for the EUR, as it got trampled on by risk averse traders. News of a potential debt default in Dubai sparked risk aversion, with European stocks dropping 3% . Thi left higher yielders like the EUR down in the dirt. The EURUSD closed much lower at 1.5013.

A report showed that German preliminary consumer price index posted its first year on year gain in 7 months, printing that prices have risen by 0.4%.The increase was attributed to a rise in energy costs. Still, Trichet and his merry men believe that inflation will remain subdued and that there isnt enough reason to raise interest rates.

With US traders still on holiday, we may see more range bound movement today. Let me just warn you that with low liquidity, the markets may be prone to some wacky movement, so be aware! Good luck trading!

115

After hitting support at 1.4830, the EURUSD pair managed to retrace some of its losses and close the week at 1.4968 last Friday. Concerns on Dubai’s debt crisis managed to mellow down, helping overall risk appetite in the markets to improve.

The important event to watch out this week is ECB’s interest rate decision on Thursday. The forecast is that the ECB would keep interest rates steady at 1.00%. Note that rate hikes are usually considered bullish for the domestic currency so if the ECB were to raise interest rates (highly unlikely), expect to see another round of euro buying.

Before that, however, look forward to euro zone’s flash CPI estimate for the month of November. The forecast is for a 0.5% rise November-on-October… A rising CPI is usually seen as bullish for the euro because it puts pressure on the ECB to raise rates. Await the actual results at 10:00 am GMT today.

116

At the end of the yesterday, the EURUSD closed exactly where it opened. This price action indicates indecision or tug-of-war between buyers and sellers. Though with German retail sales seen to post some positive growth, the fiber could possibly break yesterday’s silence and move up.

Euro zone’s annualized flash CPI for the month of November was reported yesterday. To the comfort of the ECB officials, euro zone’s annualized headline inflation figure came in at 0.6%, better than the 0.5% consensus and the -0.1% score from the previous month. The latest score is still far from the bank’s 2% inflation target but they would definitely take any increase in the CPI positively. The better-than-expected result gave the EUR some boost. Its gains, however, were short lived as it continued to slide until the US session.

Data on German retail sales will be due today at 7:00 am GMT. As mentioned earlier, sales in Germany on the retail level are seen to have expanded by 0.6% in October after falling by 0.2% in September. A jump in this figure could lift the EUR.

Germany’s unemployment change in November will also be released today at 8:55 am GMT. Another 5,000 people are seen to have been unemployed during the previous month. On a broader scale, euro zone’s unemployment rate is projected to have risen to 9.8% in October from 9.7%. Weak figures from these employment accounts would run counter to the bullish effect of Germany’s expected rise in retail sales.

117

Fueled by upbeat economic figures from Germany, the EURUSD charged towards its yearly highs. Risk tolerance, spurred by strong US economic reports, boosted the EURUSD to the 1.5100 level.

The EURUSD seems to have a solid footing above the 1.5000 handle, which served as a springboard for the pair’s rally. Data from Germany has been exceptionally strong, indicating that recovery is taking hold. Retail sales in euro zone’s largest economy rose by 0.5% in October as expected, rebounding from the 0.2% decline in September. Labor conditions have been improving as well, with German unemployment change printing a 7K increase in hiring for November. This brought Germany’s unemployment ratedown from 8.2% to 8.1%.

Euro zone data has been strong as well, erasing global recovery concerns borne of Dubai’s debt problem. The final manufacturing PMI for the 16-member nation was revised upwards from 51.0 to 51.2.

Looking ahead, euro zone has PPI data on tap. Producer prices are expected to post a 0.1% uptick for October after sliding down by 0.4% in the previous month. If the report shows that inflationary pressures are starting to intensify, it could revive speculations about the ECB’s exit strategies, causing the EURUSD to continue its rally.

Watch out for the ADP non-farm employment report from the US later on. Being a sneak preview of the NFP report, the ADP employment report could cause volatility to spike during today’s US session. Be careful out there!

118

Quiet day for the EUR pairs yesterday, as there wasn’t much movement until the US session. The EUR fell against USD, as the dollar gained slightly across the board. The EURUSD closed the day lower at 1.5047 after trading within a relatively tight range of around 80 pips.

The reason why there was little movement in the market yesterday was simply because there were barely any reports released during the European session. Only the producer price index was released, which showed that producers’ goods prices have rose by 0.2% last October, which was better than the expected 0.1% rise. Take note that a few months ago, deflation was becoming a big concern in the euro zone. Once we see a upward spike in prices – which would indicate that inflation is rising - that may be the time when the ECB will start to raise rates once again.

Today, make sure you’ve got your rocker outfit ready as a lot of noise could be made during the European session. At 10:00 am GMT, the monthly retail sales report will be available. It is expected to show that sales rose by 0.2% in October. Also, the latest version of the GDP report is scheduled for today. No revision is expected from the initial report which showed that the euro zone grew by 0.4% last quarter. If these reports come in much better than projected, the EUR could stand to benefit.

And now, to the main show case – the ECB rate decision at 12:45 pm GMT! While the ECB isn’t expected to hike rate just yet, they could make some statements regarding other quantitative easing measures, such as the possibility of floating interest rates on their 12-month loans. I suggest you check out Forex Gump’s latest blog for more insight on this potential scenario.

119

Rally then reverse! The EURUSD surged to a high of 1.5140 as the ECB upgraded their growth forecasts and announced that they will scale back their monetary stimulus programs. The pair was unable to hold on to its gains as risk aversion made a last-minute comeback during the US session.

The ECB no longer expects the euro zone economy to contract in 2010 as it forecasted 0.8% GDP growth for next year. Growth is projected to further accelerate by 1.2% in 2011. Quite optimistic, don’t you think? Well, ECB President Jean-Claude Trichet pointed out that conditions in the financial markets have improved significantly and that some of their liquidity measures are no longer needed. He then announced that the interest rate applicable for 12-month loans will be made floating, which means that it will move in tandem with the central bank’s benchmark rate. Although this gave rise to plenty of speculations about an upcoming rate hike, Trichet stressed that the ECB’s current rate is appropriate.

The EURUSD initially rallied after the ECB press conference but gave back some of its gains as risk aversion settled in during the latter half of the US session. US ISM non-manufacturing PMI was a huge disappointment as it fell to 48.7, signaling that the non-manufacturing industry is back in contractionary mode. Traders took this as a sign to let go of riskier assets in favor of the safe-havens USD and JPY.

The euro zone has no economic reports scheduled to be released today. Well, that just gives traders all the more reason to focus their attention on the US NFP report! The jobs report could show an estimated 119K in net job losses for November, which would be a stark improvement over October’s 190K increase in unemployment. Bear in mind the enormous amount of volatility that could result from this report, particularly for the EURUSD pair.

120

It was like the year 2012 for the EUR last Friday when it collapsed against the USD. The fiber made a free-fall down to 1.4821 from a high of 1.5091. With that, its long term uptrend line, which started back in March this year, has now been broken.

In a very surprising turn of events, the euro slid before the dollar despite the encouraging US NFP figures. Only about 11,000 workers lost their jobs in November as compared to the 119,000 expected. Positive economic results from the euro zone and the US are usually bullish for the EUR and bearish for the USD. The pair should have soared given this premise but this was not the case last Friday. Instead, the pair, for some reason, dropped like it’s hot.

Today at 1:00 pm GMT, ECB President Jean-Claude Trichet will give his testimony regarding the central bank’s monetary policy before the Economic and Monetary Affairs Committee of the European Parliament, in Brussels. Traders and investors are sure to look for hints concerning the bank’s future monetary actions in his speech. Any hawkish or dovish statement could move the euro accordingly.

Tomorrow (December 8), data on Germany’s industrial production will be released. Production in October is seen to have gained by 1.1% again after already advancing by 2.7%. It’s possible for this account to log in some better-than-expected results and therefore be reflected positively on the euro given the notable improvements in Germany’s neighboring economies. Switzerland, for one, is officially out of recession.

121

The euro took another hit from the dollar in yesterday’s trading session. It seemed that euro bears still had juice left in them and tried to push for the euro lower.

Again, let me stress that this week will be a very important one for currency traders as it could determine whether the inverse correlation between equities and the dollar’s value is finally broken or not. Needless to say, the important thing to watch here is how economic data from the US affects equities market and the forex world. For the dollar to continue stronger, we need to see it rally on account of better-than-expected US economic data (such as the retail sales report and the UoM consumer sentiment survey on Friday).

The notable events that happened in euro zone yesterday were the release of Germany’s factory orders report and ECB Jean-Claude Trichet’s speech.

The German factory orders report came out terrible, pushing the euro down a couple of pips. It showed that orders fell a whopping 2.1% in October, opposite the 0.6% increase initially expected. Led by the drop in exports, the decline in orders was the first in the last eight months.

More importantly, however, was Trichet’s speech a few hours before the factory orders report (8:00 am GMT). In his speech he said that there is a need to reform and improve euro zone’s banking sector to make sure that a the collapse of a large bank wouldn’t cause a wide-reaching ripple effect. According to him, euro zone’s banking sector must be made “less fragile” and “more solid”. His bearish tone prove detrimental to the euro, causing it to fall more than 100 pips.

Okay, moving on to today… The only important report on the docket is the German industrial production report (11:00 am GMT). The forecast is for a 1.1% increase in production in October, slightly lower the 2.7% growth seen the month before. If actual results come out below forecast, we could see the euro give up a bit of ground again.

122

The euro just can’t seem to catch a breather eh? For the third day in a row, the euro against the dollar, leaving the EURUSD pair to closed the day at 1.4703.

The euro was hit by news that revealed that German industrial production fell by 1.8% in October. This was a bummer, as it came after a revised 3.1% rise in September and was expected to rise by 1.1% for that month. Could we be seeing the effects of what happens when government stimulus unwinds a little bit? I say, yes! Take note that some economic stimulus implemented by both the US and European governments have ended in recent months, so demand could have fallen and could continue in coming months.

Risk aversion also crept back into play once news broke out that Fitch – a credit rating agency – downgraded Greece’s credit rating from A- to BBB+. Stocks and equities fell following the news and traders sought the safe haven of the USD and JPY.

Today we’ve got the German Final CPI m/m report, along with German and French trade balance data due. These reports don’t normally have a high impact on the markets, but just be aware of their releases at 7:00 am GMT.

The French industrial production report will be published tomorrow and will be available at 7:50 am GMT. It is expected that production has rose by 0.6% from September to October. I’ll be waiting to see if we see another shocker similar to that of the German version.