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 highest effect on the market was 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.
On the other hand, the ECB 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 sees “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 report did not have much impact on the general sentiment as the main focus remains on the latest developments in the euro area.
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
