German factory orders overview
The German data, scheduled for release today at 06:00 GMT, are expected to show the factory orders increased 0.3 percent month-on-month in February, following a 2.6 percent drop in January.
In annualized terms, the factory orders are expected to have dropped 5.4 percent in February – the ninth consecutive monthly decline.
A below-forecast print could weaken prospects of corrective bounce in the EUR
The shared currency closed on a positive note yesterday, validating the bearish exhaustion signaled by Tuesday's hammer candle. Further, EUR/USD seems to have charted a pennant pattern, a bullish continuation setup, on the hourly chart.
A stronger corrective bounce, however, may remain elusive if the German factory orders miss estimates, confirming manufacturing recession in the Eurozone's largest economy
Factory orders unlikely surprise on the higher side
Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the German economy, had slipped to 74-month lows of 47.6 in February. The gauge dropped further to an 80-month low reading of 44.1 in March.
More importantly, the details of the PMI reveal a sharp decline in the level of new business from abroad over the last two months.
Hence, factory orders data due later today is unlikely to offer any positive surprises. A big miss on expectations could end up pushing the EUR back to 1.12
About German factory orders
The Factory orders released by the Deutsche Bundesbank is an indicator that includes shipments, inventories, and new and unfilled orders. An increase in the factory order total may indicate an expansion in the German economy and could be an inflationary factor. It is worth noting that the German Factory barely influences, either positively or negatively, the total Eurozone GDP. A high reading is positive (or bullish) for the EUR, while a low reading is negative.
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