When is the German industrial production and how could it affect EUR/USD?

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