German trade figures showed exports declining 2.4 per cent, which helped the surplus to narrow to €14.1 billion from a downwardly adjusted prior month’s €17.5 billion. Markets will swing their attention back towards the Sentix sentiment survey for the eurozone before German industrial output will be released. The euro has already fallen to two-month lows against the US dollar. On the political front there are at least positive developments. The Portuguese government seems to have come up with a solution to hold its fragile coalition together and there seems to be progress in the Greek bailout negotiations. Greece is hoping its lenders will release the next tranche of bailout funds before the end of the month so that it will be able to meet a redemption payment next month.

Euro

The euro opens at two-month lows against the US dollar. The data released last week triggered additional weakness. German industrial orders slid 1.3 per cent, verses and expected gain of 1.2 per cent. The decline was primarily a result of weak domestic demand. The data highlights the concerns that grew out of weak PMI surveys. German industrial output will be released and could act as another catalyst to keep selling pressure up on the euro. As for trade figures, the data has already hit the euro. The German trade figures showed exports declining 2.4 per cent with a downward revision to last month’s exports. The trade surplus declined to €14.1 billion from an expected €17.5 billion.

Sterling

Sterling opens near four-month lows against the US dollar and euro. The dovish forward guidance released from the BoE continues to ring in the ears of investors. Sterling could see a bounce going into industrial output data. In the UK output has risen three consecutive months. Another gain could continue to support the argument that the economy is turning and may not need additional monetary measures, which would be supportive.

US dollar

The dollar is trading at three-year highs against a basket of currencies. Supporting the US dollar was economic data showing non-farm payrolls nearly touching the important 200k mark, which is seen as synonymous with a weakening rate of unemployment. The rate of unemployment held steady at 7.6 per cent, but with upward revisions of the prior month’s data, a more favourable trend seems to be establishing itself.

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