Trade Team Update

Moving on to the EUR/USD -- we got more disappointing data out of the Eurozone today with dismal German retail sales and industrial production...

Tomorrow is a monster day with an ECB rate announcement followed by Trichet's press conference. I see no way Trichet can raise rates tomorrow even though he's been wildly hawkish the past few weeks. Of course, we can't totally rule out a rate hike and should be prepared for a surprise 25bps bump, which would certainly send the euro rocketing back up... the only real reason the ECB would raise rates would be to deal with their 3.1% inflation situation, which is well above their 2.0% target rate.

But, with the Eurozone's growth set-up to take a big hit this year, I doubt Trichet would cause even more reasons for growth slowdowns by raising rates, but again, I'm prepared for whatever Trichet throws our way tomorrow.

We also hear from Bernanke tomorrow afternoon and he will be talking about monetary policy and economic outlook during his speech. The market will be watching intently for any clues or signs as to what Bernanke will do at the next FOMC meeting later this month.