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For a second month in a row, European industrial orders unexpectedly rose in December, led by a rapid increase in the demand for capital goods such as machinery and equipment.

While orders to industrial companies in the 16-nation euro area rose 0.8% for the last month of 2009, this increase was preceded by a previous rise of 2.7%. From the year-earlier month, industrial orders increased 9.5%, the first annual gain since July 2008, as a depreciated Euro is making European exports more competitive as the global economic recovery begins to gather substantial strength (in the past three months, the EUR has plunged as much as 9.6% against the U.S dollar).

However, with the economic recovery at a virtually stand still, expanding only 0.1% in the last quarter of 2009, manufactures within the zone may now be reluctant to increase spending and hire more employees.  Nonetheless, shortly after the release of the better than expected Industrial New order figure, the Euro advanced against the greenback- reaching a session high of $1.3560.

Despite closing up against the U.S dollar yesterday, the Euro has slide below yesterday’s closing price of $1.35371, hitting a low of $1.34500, in Asian Forex online trading session early this morning.

Worries about a possible downgrade of Greece weighed, with Standard and Poor’s saying on yesterday that it may cut Greece’s BBB+ rating by one or two notches within a month. The euro slipped to a one-year low against the yen on this morning, plunging as much as 1.5% to 120.232 from this morning opening price of 122.090.

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At half past midnight, GMT, the Australian Bureau of Statistics published its quarterly Private Capital expenditure – considered one of the most important releases of the week.

After plugging 3.9% in the third quarter of 2009, the only negative figure amongst a sea of positive data for Australia, the Private equity capital expenditure rose 5.5% – indicating that the economy “down under” may be strengthening enough for the RBA to raise interest rates in the next week.  The Aussie traded at 89.35 U.S. cents, from 89.36 cents just before the report was released and effected the Foerx market trading.

Shortly after midnight tomorrow, the RBA will announce the monthly Private Sector Credit. While this monthly report complements the previous private sector indicator, it tends to show small changes.

The report shows the change in the total of value of new credit issued to consumers and businesses- more credit generally means more spending and is therefore good for the economy. After many month of hovering around the 0% market, last month’s increase of 0.3% was a pleasant surprise for the Australian economy. This time around, analysts are predicting another rise of 0.2% for February.

For the first time in 11 months, German business confidence unexpectedly fell in February, taking a turn for the worse as the coldest winter in 14 years had a damaging effect on both retail sales and construction.

Yesterday’s Ifo Business Climate report, based on a survey of 7,000 executives, came in below the expected report of 96.2, slipping to 95.2 from January’s 95.8. Germany’s recovery from the worst recession post World War II, braked in the final quarter of 2009, as domestic spending fell. Below seasonal temperatures have brought construction sites to a freeze, pushing companies to hold back in hiring, thus having a negative impact on household spending.

The German business sentiment index is closely watched as an early leading indicator of current conditions and business expectations in Germany – positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative, and can have a bearish impact on the currency. The euro eased to $1.3629 (at 11 a.m. in Frankfurt) from $1.3679 before the report was published.

Early this morning, Germany release its GfK German Consumer Climate, a survey based on 2,000 consumers, fell to 3.2 for March from a revised 3.3 in February, the fifth consecutive monthly drop for the forward-looking indicator.

After a series of European economic indicators came in below expectations yesterday, the EUR saw losses across the board. The EUR/GBP dropped over 0.65% over the course of yesterday’s trading sessions.

Forex Online Investors have yet to show much confidence in the Greek bailout plan, and following yesterday’s disappointing news, all signs appear to be bearish for the ailing currency. Today, traders are recommended to pay attention to the Industrial New Orders report (1000GMT)-the report is a leading indicator of production, and could provide a clear look at the current state of the Euro-Zone economies.

The British pound is at the edge of falling to a new 9 month low against the U.S. dollar, closing yesterday at 1.53918. There was no U.K. economic data released yesterday, expect the dovish comments from Bank of England officials confirming fear that the pound could be the worst performing G7 currency this quarter. In Yesterday’s inflation report hearings, the Bank of England Governor Mervyn King said that official officials are prepared to do “whatever seems appropriate” to prevent a relapse in the U.K.’s economic recovery.

In his opening statement, King said that while economy has begun to heal and process will take time. The crisis left many serious challenges in the economy, including how to reform the international financial system as well as how to reduce largest peace-time fiscal deficit and how to restructure the banking and financial system to prevent another, more serious, crisis in future.

Central bank officials also went to great lengths to talk about how a lower sterling will boost growth, sending a clear message that the BoE is banking on a weak currency which suggests that they will artificially try and keep the currency at its current record low levels.

The U.K. economy is entering a “very grave stage” and the Bank of England should expand its 200 billion-pound ($308 billion) bond-buying plan to fight the risk of a relapse, former Treasury adviser Roger Bootle said yesterday. However, UK officials put the asset buying program on ice this month in order to better gage the strength of the recovery, as they feel that the effect of the quantitative easing measures have yet to be fully seen. The Pound closed down 0.575% against the greenback (at $1.54808).

The Forex market got off to a slow start this week, with both the US and Canadian markets closed due to public holidays.

None the less, one minute after midnight yesterday, the UK released its monthly Rightmove HPI – showing that the asking prices for houses rose 3.2%, the sharpest increase since April 2007.The 3.2% monthly rise followed a 0.4% rise in January, leaving housing prices in the UK up 6.1% on the year – however, the report went on to mentioned that the rate of increase in housing asking price was not substantial as it merely reflected a scarcity of supply.

Last week the Pound managed to regain some of its prior week losses, up 0.66% against the USD – the pair closed on Friday at 1.56997. For the majority of the past week, the GBP/USD moved sideways, fluctuating between 1.55604 and 1.57633.

Yesterday morning’s early HPI index pushed the pound to high of 1.57188 – however the pair eased back to the 1.5650 area during the US session. This morning, the Pound re-attempted its bullish movement against the dollar, appreciating as far as 1.57217 (up 0.36% from yesterday’s close).

Early this morning (0930GMT), the UK will publish its yearly CPI, considered the most important indicator of inflation. Last week Mervyn King’s speech acknowledged that inflation was likely to have risen 3% in January.

The last CPI report showed a rise of 2.9%; however, this morning’s report is predicting a drastic rise of 3.6% in inflation.

Simultaneously, the BoE is scheduled to release the Core CPI y/y, also expecting an increase of 3.2% versus last month’s rise of 2.8%. Higher or lower than expected percentage increase in the CPI, will most definitely produce volatile waves of movement for the Pound.

The Euro slightly appreciated against the US Dollar, in the early Asian session, as the outcome of a meeting of euro zone finance ministers failed to instill confidence that Greece’s debt problems will be resolved quickly.

Moderate gains in higher-yielding currencies such as the Australian and New Zealand dollars helped to lift the single European currency slightly; however, the euro still remained close to its eight month low against the USD. The EUR/USD increased 0.477%, as the Euro managed to rebound from yesterday’s close of 1.35976 to a high of 1.36624 this morning.

Later this morning at 10:00 (GMT), Germany will release its ZEW Economic Sentiment – an important gauge of economic activity. In the past months, as a reflection of the Euro zone’s troubles as well as Germany’s stagnant economy, the indicator has been quickly deteriorating. For the sixth time in a row, this all important German indicator is expected to take a dive again – analysts are expecting a drop from the previous level of 47.2 to 42.5.