With the improvement in the sentiment on Thursday after successful bond selling inItalyandSpainand after the ECB had refrained from continuing its interest rate cuts, the pair fell to the downside as investors damped refuges.
The pair was positively affected by the successful bond selling bySpainandItalyas the auctions in both countries witnessed strong demand and drop in borrowing cost, providing some hopes the debt crisis is easing.
The ECB, on the other hand, left the interest rate steady at 1.00% this month after slashing it over the previous two meetings, giving glimpse of hopes the economy’s path will improve.
Draghi said “tentative signs of stabilization of economic activity at low levels,” where he expects growth to recover gradually.
Moreover, the weakU.S.retail sales and initial jobless claims reports did not have much impact on the general sentiment as the main focus remains on the latest developments in the euro area.
Data from theU.K.showed that manufacturing production dropped 0.2% in November from the revised -0.9% in October, which was -0.7% initially, compared with estimates of -0.2%.
On Friday, the week ends with the release ofU.S.trade balance at 13:30 GMT, where expectations refer to a widened deficit to $44.9 billion in Nov. from $43.5 billion deficit a month earlier. U.S. University of Michigan confidence, which is due at 14:55 GMT, is estimated to increase to 70.4 in Jan. compared with the prior reading of 69.9.
The data is expected to have a significant effect on the pair’s movement due, yet the pair will probably be more affected by the general sentiment which will focus on a second auction forItaly.
Originally posted here
