Euro hit by worrying German factory order data

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.