Disappointing French News Turns EUR Bearish

The euro fell against most of its main currency rivals yesterday, after several worse than expected French economic indicators led to risk aversion in the marketplace. In addition, a disappointing Chinese manufacturing figure led to fears regarding the pace of the global economic recovery. Against the US dollar, the euro slipped more than 80 pips during European trading to reach as low as 1.2917, a one-week low. Meanwhile, the EUR/JPY dropped some 78 pips to trade as low as 100.92, its lowest level since last Friday. As markets get ready to close for the week, traders will want to pay attention to announcements out of Spain regarding its debt issues and whether the Spanish government will seek a bailout package. Despite the fact that a bond auction yesterday signaled increased demand for Spanish debt, most investors remain convinced that a bailout request is likely to happen in the near future. Any signs that the situation in Spain is worse than previously thought could result in the euro extending yesterday's losses.

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