France Sees Solid Demand

Markets had been eager to hear the outcome of today’s French sovereign debt auction, concerned that a tepid response would provide ammunition for credit ratings agencies to push through the threatened downgrade of France’s coveted AAA rating. However, investor fears can be somewhat assuaged as solid demand was reported for the country’s first auction this year of their 10-year benchmark instruments. According to the statement release, France sold a total of €7.96 billion, close to its target, with an average yield of 3.29%, slightly higher than the 3.18% average yield from last December’s auction and reflective of investors’ concerns.

Some mixed news from the Eurozone’s manufacturing sector is likely to weigh heavily on the Euro as well as European equities. Eurostat reported earlier today that seasonally adjusted new industrial orders rose in October to 1.8% on a month over month basis, but fell short of the consensus call of a 2.5% rise. Nonetheless, it was an improvement from the previous reading of -7.8%, which had been revised lower from the previously reported -6.4%. On a year over year basis, new industrial orders remained flat.

Eurostat also reported producer input prices today; on a monthly basis the Producer Price Index was reported higher at 0.2% in November up from October’s 0.1% which was also the consensus forecast. On a yearly basis, the PPI rose to 5.3%, slightly higher than the 5.2% expected but below the previous period’s 5.5% reading.

The Euro continues to trade close to the day’s low at 1.2862, and European equities have failed to respond positively to the news, with the CAC-40, DAX, and FTSE currently lower by 0.84%, 0.56% and 0.57%, respectively. Trader sentiment on OpenBook remains bullish for the European bourses, especially France’s CAC-40 with bulls outnumbering bears by 11 to 1. The Pound Sterling is also under some pressure against the U.S. Dollar, despite better than expected data on services sector PMI; the GBP/USD pair is lower at 1.5548, and sentiment on the eToro trading floor is primarily bullish.