By TraderVox.com
Shut Down! Just when we thought the euro was going beat up its major counterparts, it instead got the beating of them. EUR/USD opened at 1.3067, reached a high of 1.3192, before plummeting to a low of 1.3044. EUR/JPY also ended the day down very low as it closed 50 pips away from its 102.90 open price.
China's promise to lend its support to help alleviate the euro zone debt crisis got the euro's hopes up during the Asian session. Remember a few weeks ago China hinted they may participate in the EFSF a few weeks ago? Well our boys down in china changed their word yesterday and confirmed they will definitely participate in the program. Now that's sounds very good!
However, the euro rally that was jolted up by this release quickly saw a reversal during the first few hours of the London session when Eurogroup boss Jean-Claude Juncker reiterated to Greece that the release of the bailout funds still wasn't a sure thing. Bear in mind that, as many analysts have said and discussed before, euro zone finance ministers still haven't made a decision on whether the next block of funds will be released or not, and that the deadline of Greece's debt obligations is fast-approaching. Juncker did mention that they will make their decision by February 20, so watch out!
As for economic data, the recent GDP reports from the euro zone showed that Germany and Italy both saw contraction during Q4 2011 while France printed 0.2% growth. Overall, the region contracted by 0.3% during the Q4, making several market participants to worry that the feared double-dip could be waiting in the wings. It didn't help that the previous quarter's figure was altered from 0.2% down to 0.1%, reflecting weaker than expected growth.
Today, only the ECB monthly bulletin and the Italian trade balance are on the euro zone's news calendar. Both reports aren't expected to make huge waves across the charts as traders are still zoned in on the developments in the Greek debt situation.
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