The EUR/USD pair inclined sharply yesterday after the flow of upbeat fundamentals and bond auctions, where optimism spread in the market after inflation eased in the euro zone and the confidence in business improved in Germany and the euro zone.
The improvement in the sentiment affected the pair sharply, where investors’ appetite for risk improved, which led them to hold more risky highly yielding currencies instead of other low yielding currencies.
Spain and the European Financial Stability Facility were able to run successful bond auctions yesterday, which supported markets to extend the gains and recover the losses incurred on Friday.
Today, the pair could fluctuated heavily due to the heavy load of fundamentals awaited from the United States and Europe; however, the German bond sale will highlight our session as investors will look at the first test for Germany after the wide downgrades on Friday.
The euro area Construction Output for November is due at 10:00 GMT after it dropped 1.4% in October and on the year was down 2.8%.
As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.
At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.
At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.
Auctions:
10:15 GMT Germany sells bills
10:30 GMT Portugal sells bills
10:30 GMT Belgium sells bills
Originally posted here
