The Euro-zone trends will still be an important focus given underlying credit fears and rising bond spreads between the individual countries. There will also be fears over the underlying structural vulnerabilities in countries such as Greece and Spain. In this environment, Euro confidence could suddenly weaken sharply on speculation over a debt default and this should not be under-estimated as a potential threat. The Euro could still re-challenge 1.5140 against the dollar in the very short term, but the Euro remains a sell on rallies to this level.

The latest Euro-zone economic data has continued to illustrate the divergence seen over the past few months and this trend will increase the risk of more severe internal stresses.

For the Euro-zone as a whole, the PMI business sentiment index for November increased to a final 51.2 for November from a provisional 51.0 and the 50.7 figure recorded last month. The data for individual countries recorded an increase to 52.4 for Germany and 54.4 for Franc while the Italian figure was close to the 50 expansion threshold.

In contrast, there was a decline in the Spanish index to 45.3, the Irish index remained below the 50 level while the Greek index weakened to a six-month low of 47.3.

Germany and France will dominate the economic performance, but the data elsewhere will increase fears that stresses within the smaller countries will increase. There will be fears that tax revenue will weaken which would put further upward pressure on budget deficits and increase the potential treat of a bond default.