Overview
Eurozone's manufacturing powerhouse Germany is set to publish Industrial Production, Current Account and Trade Balance data for November at 07:00 GMT.
The industrial data is expected to show the factory activity expanded at a seasonally adjusted rate of 0.7% month-on-month in November, having dropped by 1.7% in the previous month. The annualized number is forecasted to print at -3.8% vs. September's -5.3%.
Meanwhile, Germany’s Current Account data for November is expected to arrive at EUR 16.9B vs. EUR 22.7B last. The Trade Balance figure is seen at EUR 20B as against EUR 20.6B booked in October. Imports are seen rising while Exports are likely to drop in the reported month.
Weak data likely
Industrial Production is unlikely to see any positive surprise in November, as suggested by the lead indicators.
The Contracts for goods ‘Made in Germany’ arrived at -1.3% on the month vs. +0.3% expected and +0.2% last. On an annualized basis, Germany’s Factory Orders fell 6.5% last month vs. -5.5% expectations and -5.6% previous.
Further, IHS Markit’s Purchasing Managers’ Index (PMI) for manufacturing had remained well below 50, showing that activity in the sector had contracted for the 12th month in a row in December.
Impact on EUR/USD
EUR/USD consolidates the tepid bounce from two-week lows of 1.1104 reached in early Asia, as the demand for the US dollar remains unabated amid upbeat US macro news and easing US-Iran geopolitical tensions.
Despite the latest uptick, the spot remains exposed to further downside risks amid bearish technical set up.
“Sellers may keep a 50-day SMA level of 1.1093 as the immediate target whereas 50% Fibonacci retracement of October-December upside, at 1.1060, could lure them afterward. However, an upward sloping trend line since October-start, at 1.1048, could restrict the pair’s further downside. It’s worth mentioning that the 12-day MACD indicator flashes bearish signs. On the upside, EUR/USD prices need to close beyond the confluence of 21 and 200-day SMA, at 1.1140, to cross the 1.1200 round-figure,” FXStreet’s Analyst Anil Panchal notes.
Markets remain wary that the spot may show little reaction to the Industrial Production data after the shared currency ignored an unexpected drop in the German Factory Orders seen on Wednesday.
At the press time, EUR/USD trades around 1.1115, up 0.10% on a daily basis.
About German Industrial Production
The Industrial Production released by the Statistisches Bundesamt Deutschland measures outputs of the German factories and mines. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. A high reading is seen as positive (or bullish) for the EUR, whereas a low reading is seen as negative (or bearish).
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