Euro, British Pound Lose Momentum Despite Improved Cooperation On Financial Aid

Both the euro and the British pound pulled back through the early morning hours of the US session. However, this retracement wasn’t significant enough to put the massive rallies the two currencies enjoyed over the past two weeks in jeopardy. News out of the region was generally mixed. From the economic docket, the Euro Zone released disappointing industrial production numbers. According to the data, factor output contracted 17.3 percent in the year through January – the most aggressive slump on record. As the regional and global recessions take hold, factories have little choice left but to curb production and fire workers to avoid closing their doors for good. The other market-worthy event risk for the session was news that the EU had reached an agreement to expand aid to its struggling central and eastern neighbors. Though it was not quite the broad bailout of Eastern Europe that Hungary had called for a few weeks ago, leaders agreed to boost funding to the IMF; discuss a loan to Romania (part of their case-by-case bailout effort); and double the credit line to those countries in financial stress to 50 billion euros. Perhaps this is a sign of their openness to negotiate when the G-20 meets two weeks from now.