ast week's US employment report came in pretty much in line with what markets were hoping for, keeping expectations of an imminent increase in US interest rates later this month.
The market reaction was a little muted though largely as result of the curve ball thrown out by the European Central Bank the day before, when they eased monetary policy but by not nearly as much as financial markets had been expecting.
This misunderstanding came about from the markets taking the ECB President Mario Draghi at his word when he insisted in November that the central bank would "do what we must" to safeguard the economic recovery in Europe.
In the past, taking the ECB President at his word has normally been good enough simply because on previous occasions the stakes have been much higher, and while he still represents one vote amongst many, he was able to make the case that the risks of not acting far outweighed the risks of taking action.
On this occasion he was unable to make the case for action and as I argued last week he was not able to deliver on his promises simply because the recent economic data didn't support his argument.
What we saw last week was a case of a central bank chief hoisted by his own hubris, and brought back down to earth by German concerns about doing too much, and as such the Teflon shine of Super Mario was tarnished as he crashed the Mario Kart.
As a result we got the biggest one day move in the euro since 2008, as well as a similarly strong move in German bond markets.
This sharp reversal of the downtrend in the euro could well see the single currency start to drift higher into year end, and could well also make it much more likely that the Federal Reserve will increase its interest rate on Wednesday next week.
The key level to watch is the 1.0800 area which has so far acted as a base on the current pullback and had been support for May through July of this year.
Much may depend on Thursday's US November retail sales numbers which will give us the first glimpse into how much the US consumer decided to splash out over Thanksgiving, as well as Black Friday and Cyber Monday.
So far the weakness in oil prices hasn't really translated into a consumer premium for US retail sales and the Black Friday sales are likely to be the last opportunity US central bankers will have to gauge how confident the US consumer is about opening its wallet before year end.
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