Euro hit by worrying German factory order data

Joshua Mahony MSTA Scope Markets

Volatility is expected to return today, with the payrolls figure in view after yesterday’s muted session. In Europe, a huge decline in German factory datapoints towards further pain for the exporting powerhouse.

Volatility expected to return after muted Thursday
Will ADP weakness point to similarly poor payrolls figure?
Euro declines after German factory orders slump

Traders will be keen to see the return of volatility today, with yesterday’s Independence Day celebrations seeing the stock market surge hit the buffers. There is plenty of reason for optimism though, with a growing dovish swell throughout European and US central bankers helping push up equity prices. Today sees the US jobs report guarantee the return of volatility, with Wednesday’s soft ADP figure pointing towards potential for another weak headline figure today. Donald Trump has been piling on the pressure over recent months, with the Fed unwilling to bend for the most part. However, this month it is evidently time for the Fed to act, and with US data expected to continue stuttering as long as the US-China trade relationship remains broken, markets are expecting much more that just a ‘one-and-done’ rate cut.

German factory orders plunged heavily in May, putting downward pressure on the euro in early trade. Unfortunately, we have grown relatively accustomed to the decline in German data amid the ongoing slowdown in global trade and growth. However, tentative hopes of an industrial recovery have been dashed today, with a huge 8.6% decline in new orders representing the worst slump since 2009. Consumer goods provided the one positive outlier to this worrying story, yet given that this represents a relatively small piece of the pie, today’s data points towards a troubled Q3 for German growth.

Ahead of the open we expect the Dow Jones to open 39 points lower, at 26,927.

Author

Joshua Mahony MSTA

Scope Markets

Joshua Mahony is Chief Markets Analyst at Scope Markets. Joshua has a particular focus on macro-economics and technical analysis, built up over his 11 years of experience as a market analyst across three brokers.

AUD/USD remains depressed 0.7000, awaits FOMC Minutes

AUD/USD struggles to capitalize on its recent recovery move and trades with a negative bias below 0.7000 in Wednesday's Asian session. Amid geopolitical uncertainty, the US Dollar attracts some dip-buyers after a fresh leg up in US bond yields, keeping the pair under pressure despite hawkish RBA expectations. All eyes now remain on the FOMC Minutes.

USD/JPY holds firm near 158.50 ahead of Fed Minutes

USD/JPY hangs close to a one-and-a-half-week high near 158.50 in the Asian session on Wednesday, with bulls now awaiting a move beyond the 200-day SMA hurdle before positioning for further gains ahead of the FOMC Minutes. Meanwhile, a fresh leg up in US bond yields revives US Dollar demand amid geopolitical uncertainties, boosting the pair amid dovish BoJ commentary.

Gold remains depressed; eyes two-month low ahead of FOMC Minutes

Gold maintains its offered tone through the Asian session on Wednesday, trading within striking distance of a two-month trough, around the $4,100 neighborhood touched the previous day. Resurgent US Dollar demand is seen as a key factor exerting pressure on the commodity as traders now look forward to the FOMC meeting minutes for a fresh impetus.

Dogecoin extended correction and weakening momentum raise downside risks

Dogecoin extends its losses, trading around $0.090 down more than 5% so far this week. Bearish pressure is strengthening, with short positions reaching a one-month high and traders in overheated conditions. Meanwhile, weakening momentum indicators are also hinting at further losses in DOGE. Derivatives data shows cautious signals among traders.

USD/INR remains broadly muted after RBI’s 25 bps hike in Repo Rates to 5.5%

The Indian Rupee remains broadly muted at around 96.37 against the US Dollar after the Reserve Bank of India’s monetary policy decision. In the policy meeting, the RBI decide to hike its Repo Rate by 25 basis points to 5.5%, the first hike since February 2023.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.