Overview
Germany, the manufacturing power house of Europe, will publish industrial production figures for the month of May at 06:00 GMT today.
The data is expected to show the factory activity contracted at a seasonally adjusted rate of 0.4% month-on-month in May, having dropped 1.9% in the preceding month. In annualized terms, the industrial production is seen contracting 1.1% in May, following a 1.8% slide in the previous month.
Lead indicators point to weakness
German factory orders plunged 8.6% year-on-year in May, the biggest slide in almost a decade, underscoring the negative impact of trade tensions on the Eurozone’s biggest economy.
IHS Markit’s flash Purchasing Manager’s Index (PMI) for manufacturing dropped to 44.3 in May from 44.4 in April. That was the fifth below-50 monthly in a row. A reading below 50 indicates contraction. Notably, both new orders and export sales had led the decline in the PMI.
Going by the lead indicators, the probability of industrial production printing below estimates is high.
A bigger-than-expected contraction will only strengthen the case for an early stimulus by the European Central Bank (ECB) and send the EUR/USD pair lower toward the support at 1.1181 (June 18 high).
As of writing, the pair is trading largely unchanged on the day at 1.1228. The spot fell 0.53% on Friday and hit a three-week low of 1.1207 as a better-than-expected US non-farm payrolls data dampened expectations of aggressive Federal Reserve easing and put a bid under the US Dollar.
Technical Levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD climbs to 10-day highs above 1.0700
EUR/USD gained traction and rose to its highest level in over a week above 1.0700 in the American session on Tuesday. The renewed US Dollar weakness following the disappointing PMI data helps the pair stretch higher.
GBP/USD extends recovery beyond 1.2400 on broad USD weakness
GBP/USD gathered bullish momentum and extended its daily rebound toward 1.2450 in the second half of the day. The US Dollar came under heavy selling pressure after weaker-than-forecast PMI data and fueled the pair's rally.
Gold rebounds to $2,320 as US yields turn south
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Here’s why Ondo price hit new ATH amid bearish market outlook Premium
Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.
Germany’s economic come back
Germany is the sick man of Europe no more. Thanks to its service sector, it now appears that it will exit recession, and the economic future could be bright. The PMI data for April surprised on the upside for Germany, led by the service sector.