All around weakness in European data sent the Euro to a 2 month low. The currency market is cyclical and whenever a currency becomes too strong, we begin to see weakness in the economy, especially if the country is export dependent.
The biggest downside surprise today was in German industrial production which fell by the biggest amount in 7 years. Even though the German trade balance was right in line with expectations, the surplus in both Germany and France deteriorated. This is a clear indication that the economy is hitting a plateau and is one of the main reasons why the ECB will postpone any further rate hikes to September at the earliest. The calendar is light next week. The only pieces of data that have the potential to move the Euro are Eurozone industrial production, consumer prices and trade. The more interesting story will be Switzerland, who we expect to raise rates to 2.50 percent.