The Euro gained against the U.S. dollar after a weaker than expected GDP report released by the Bureau of Economic Analysis fueled worries about the health of the US economy. However, investors’ sentiment can change as the gulf between France and Germany, the eurozone’s two biggest economies, widens over tackling the debt crisis. Francois Hollande, the frontrunner to replace Nicolas Sarkozy as French president, said “It is not for Germany to decide for the rest of Europe. He said that if he becomes the new president, he will not pass the fiscal austerity pact agreed by the leaders of 25 European nations, unless it contains new measures to spur on growth.
His stance puts him on a collision course with the German Chancellor Angela Merkel. While her relationship with Nicolas Sarkozy has not been smooth, his replacement by Francois Hollande threatens to blow apart the partnership that has seen their two nations push through tough reforms across the region.
On the other side of the Atlantic, non-farm payrolls and ISM manufacturing will be the most prominent releases next week, as well as a string of other employment data and auto sales. Unemployment claims will be released Thursday at 13:30 GMT and Non-farm payrolls will be released Friday at 13:30 GMT. There are two other employment indicators for the week: the ADP Non-farm employment change data, to be released Wednesday at 13:15 GMT and the Challenger job cuts report, to be released Thursday at 12:30 GMT.
The latest data released by the Commodity Futures Trading Commission showed that speculative traders aggressively bet on the British pound to continue its recent bullish trend. Traders held a net $760 million long GBP positions. Speculative traders also added to their open CHF positions. The data also showed that traders slightly trimmed their open short euro position by 4% from a week earlier to reach a net of $18.7 billion. According to the data, they also reduced their short yen position by the same percentage to reach a net of $8.6 billion.