FOREX EUROPE UPDATE - EUR

The market expects the ECB to hold rates steady at 3.5% today, but uncertain remains regarding when to expect the next hike.

Investors will be listening for the word "vigilance" and EUR performance ahead today will hinge on Trichet's speech scheduled at 13:30 GMT.

Yesterday French industrial production numbers for November came in weaker than expected, with manufacturing production down 0.2% on the month against expectations for a 0.5% rise.

The data is in contrast to strong German numbers earlier in the week and serves as an important reminder that Germany is not synonymous with the Eurozone.

The Bank of England will announce interest rates at 1200 GMT and we expect the recent run of weaker data will further dampen hawkish sentiment on the MPC.

UK November trade numbers came out worse than expected yesterday, which may raise concerns about the GBP's recent trade-weighted strength.

We continue to see downside risks to market pricing of further MPC tightening and upside risk for the EUR vs. a number of key crosses.