We have mentioned earlier this week that The manufacturing data have come after series of weak EU reports like the recent IFO weak figures which have shown a struggling business climate in germane which could effect negatively on the single currency which is already suffering a technical pressure versus the greenback after forming another lower high at 1.575 after 1.5935 and 1.6023 putting technical downside pressure on the pair.
It looks that another hike is getting out of ECB table in this week ECB rate decision meeting tomorrow and it should pay much attention to the growth downside risks. Jean Cluade Trichet has said it clearly after the recent ECB meeting when it has hiked by .25% in the face of the inflation to settle price stability over the medium term when the oil prices were well above 140 by referring to the downside risks currently and the sluggish growth of the second quarter after good data in the first quarter which can tackle further tightening actions in appreciation of the growth down side risk which triggered a profit taken wave after the hike and now it is getting better in US and in my view the ECB can not go tighter than that before a realized improvement in US if it is not a beginning of tightening back again in US which can give a support to the greenback versus the single currency amid the current oil and commodities prices easing.

And today event was Trichet's speech which has come exactly as expected. Trichet has highlighted the growth down side risks by a serious talking about the growth down side risks. In the same time he has tried to mention that the ECB recent decision to hike interest rate by .25% was important to avoid inflation second round effect and the ECB main job is to anchor inflation and to settle price stability over the medium term in the Euro zone. The single currency has tumbled across the broad with aggressively after spiking on the release of the US weekly jobless claim which increased this week to 455k. This dovish sentiment is expected to continue weighing on the single currency which actually facing weak growth performance can be prolonged to the rest of this year. Trichet has indicated in the ECB press conference after its decision t keep interest rate unchanged at 4.25 that he is to talk about the growth in a clearer way in the next meeting in September.

Best wishes

FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com