Euro: Strong Data Fails to Please The Market

The Euro has been trapped within a 200 to 250 point trading range for the past week and even though the currency rebounded against the US dollar today, the move was just a rebound and nothing else. Economic data was strong with German import prices, French business confidence, French consumer spending and producer prices all surprising to the upside. The current account was weaker, but the data mattered little because it was from October. The Euro is stronger today, but the bulk of the move happened in the late Asian trading session and not on the heels of the economic releases. Economic data out of the Eurozone has been strong, but this strength has long been discounted by the market. Also, the recent liquidity injections by the ECB suggest that even if they want to raise rates, they will not be able to do so anytime soon. ECB President Trichet repeated the central bank's goal of making sure the inflation spike is short lived, but Constancio took a different stance and warned the market that the risks to growth have increased as a result of the credit crisis. Like the US, the Eurozone economic calendar is exceptionally light in the coming week. The only potentially market moving report is Eurozone Retail PMI on Friday. Switzerland on the other hand will be releasing the UBS Consumption Indicator and the KoF Leading Indicator.Dow Rises 200 Points, USDJPY Hits One Month HighsWall Street's preholiday rally has helped to take all of the Japanese Yen crosses higher. There was no economic data released from Japan overnight, but they will be the only country releasing economic data on Monday and Tuesday. These reports should not be market moving however because most traders will be out for the holiday. Meanwhile sovereign wealth funds continue to dominate the headlines with Singapore's state-owned Temasek Holdings planning to inject $5 billion into Merrill Lynch. They have become the new saviors for banks who have been badly burned by subprime losses. Expect this new trend to continue.