As we said in our previous market update, we are in the winter holiday season and with Christmas in about a week, the economic calendar is pretty light. There are only about 3-4 important economic releases this week and the German IFO business climate and the Eurozone labour costs are two of them. 

The German numbers posted a nice jump from 110.4 to 111, and looking at the German IFO business climate chart, we can see that the best thing here is the trend. The line is moving higher, ever closer to 2012 highs, while the dips are getting shallower each time. 

German business climate keeps improving and so does the EU business climate 

IFO said in their accompanying statement that the weaker Euro is helping German exports, consumers continue to spend, and the domestic demand remains robust. I also saw a line there saying that the Italian crisis is not affecting market sentiment and the ECB has everything under control. I´m not sure about those last two comments, but it looks like they are eyeballing the panic button. 

Only a little later, the Eurozone Q3 labour costs were published and according to me, this is the most important and the best numbers we will get from the single market until the new year. EU labour costs grew by 1.5% in the third quarter, while jumping 2.2% year on year. 

The wages have been a very important economic indicator on my list because they show the real health of the economy. In a weak economy, the wages remain stagnant even though the unemployment rate might be low, so if they continue to pick up like this, then the ECB (European Central Bank) will be forced to turn the tap off pretty quickly. 

In fact, the Germans of IFO delivered their usual "low rates" warning when Fuest said that ECB interest rates are too low for the Eurozone. However, the Euro couldn't take advantage of the better numbers because a fresh wave of USD buying is underway. Let´s see if we will take out Thursday´s low at 1.0350's.