EUR/USD: Euro Under Pressure After Weak German Factory Orders

The euro is trading around $1.10 versus the US dollar in early trade on Thursday, on weak German data, after slipping a for a third consecutive session on Wednesday. The euro US dollar exchange rate closed 0.4% lower at US$1.1001, just off its yearly low, as stellar US data releases painted a rosy picture of the US economy.

Euro to United States Dollar – EUR trading on the back foot at the start of European session

The euro is on trading on the back foot at the start of the European session following an unexpected slump in German factory orders. The 2.1% decline month on month in December is the steepest decline in almost a year. The figure was significantly short of 0.7% growth that analysts forecast. It also puts a dampener on suggestions that the manufacturing sector in Europe’s largest economy is slowly starting to improve. Factory orders are considered a key indicator of the strength of an economy because they indicate future output.

Looking ahead investors will now focus on the European Central Bank economic bulletin, due for release shortly and a speech by Christine Lagarde, European Central Bank President later today.

United States Dollar

Whilst concerns surrounding the spread of coronavirus and its potential impact on Chinese and even global growth have kept investors on edge, yesterday’s barrage of US data went some way to alleviating some of those concerns.

US ADP payroll data revealed 291,000 jobs were created in the private sector in January. This was the strongest print in almost half a decade and points to a robust US labour market.

Separately, the ISM non-manufacturing surprised to the upside at 55.5 in January, up from 54.9 in December thanks to improvements in business activity and new orders. The data comes hot on the heels of strong ISM manufacturing data earlier in the week.

Improvements in data have come as relations between US and China have also improved in, particularly since the signing of the US – China first phase trade deal last month.

News of a coronavirus vaccine breakthrough has eased some concerns surrounding the deadly virus, although investors will continue to monitor the situation. Mid-tier data could also attract investors’ attention ahead of Friday’s non-farm payroll.

Currencylive.com is a news site only and not a currency trading platform.

Currencylive.com is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.