The euro is stable on Monday, as EUR/USD trades in the mid-1.13 range. On the release front, there are no major European or US events on the schedule. The German trade surplus widened to EUR 21.8 billion. Eurozone Sentix Investor Confidence jumped to 12.4 points. In the US, we’ll get a look at the Labor Market Conditions Index.
The euro lost about 160 points on Friday, as US Nonfarm Payrolls improved to 257 thousand in January, up from 252 thousand a month earlier. This easily beat the estimate of 236 thousand. The strong reading has reinforced expectations for a mid-year interest rate cut by the Federal Reserve, which would be a boost for the US dollar.
The Greek government suffered a setback on Friday, as the Standard and Poor’s rating agency downgraded Greece’s debt from B to B-, which is just one level above default. S&P also kept the outlook as “negative”, which indicates that further cuts are possible. This follows the ECB announcement that it will no longer accept Greek government bonds as collateral for ECB loans as of February 11. For its part, Greece has pledged not renew the bailout program, which will expire at the end February. There will likely be more developments during the week in Brussels, as EU finance ministers meet on Wednesday, and German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras attend an EU meeting on Thursday.
