The Euro?s strength today can be credited to multiple factors. First and foremost, Japanese traders finally had a chance to react to the softer US labor market number from last Friday. Secondly we had stronger German factory orders to compound the Euro bullishness.
Even though a number of economic releases are beginning to show the country?s vulnerability to the strength of the currency, just as many pieces of data have shown the country?s resilience. Today?s German factory orders were a perfect example. For the time being, the manufacturing sector is holding up well and the numbers indicate that the sector is continuing to boom. This suggests that we could see a stronger German industrial production number tomorrow as well. Finally, Sarkozy won the French elections with a 53 versus 47 percent victory over Royal. The election results led to a mild Euro rally. As long as there are no major surprises from the Federal Reserve, the Euro should remain above 1.3550 going into the ECB interest rate decision as traders look forward to further rate hikes in June. Meanwhile the Swiss unemployment rate fell from 3.0 to 2.9 percent. The market was looking for a larger improvement, but nonetheless the jobless rate has moved to a 12 month low, reflecting a healthy labor market.