German Factory Orders overview
The German data scheduled for release at 06:00 GMT is expected to show the Factory Orders dropped at a seasonally adjusted 1.3% year-on-year in July, following a 3.36% slide in June.
Manufacturing PMI hit 7-year low in July
The headline IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy – sank to a seven-year low of 43.2 in July, mainly due to the steepest drop in new export orders since 2009.
Put simply, German manufacturers went into full retrenchment mode in July. Therefore, the Factory Orders are unlikely to surprise with a positive print.
Impact on EUR/USD
That the German economy is experiencing a slowdown is generally accepted by now and priced to a greater extent. Further, EUR/USD's daily chart is flashing a short-term bullish reversal, as discussed earlier today.
Also, investors are buying risk in response to new optimism on a possible US-China trade dispute resolution and the fading prospect of a hard Brexit.
Put simply, a bigger-than-expected drop in the German Factory Orders is needed to put the EUR under pressure.
The common currency will likely rise toward the resistance at 1.1064, as suggested by the daily chart if the Factory Orders print in line with the estimates or blow past expectations.
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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