- German industrial production -17.9% mom in April vs -8.9% in March
- Euro (EUR) investors await Eurozone investor sentiment data
- Optimism from expectation defying US jobs report dragged on US Dollar (USD)
- At 08:15 UTC, Euro to US Dollar (EUR/USD) is trading flat at $1.1286
The Euro is consolidating gains from the previous week. The Euro US Dollar exchange rate surged 1.7% last week, settling on Friday at US$1.1286.
At 08:15 UTC, EUR/USD is trading flat at US$1.1286, slipping from overnight highs of US$1.1320 as the pair continues to trade close to 3-month highs.
The Euro was giving up earlier gains after another sharp drop in German industrial production in April. Industrial production fell by a worse than forecast -17.9% in April, down from -8.9% decline month on month in March. This was the sharpest monthly drop ever, highlighting the economic cost of the lockdown measures. Production in all sector fell sharply, including a drop of over 70% month on month in the automotive sector.
Looking ahead, the lifting of lockdown measures should lead a rebound in economic activity and industrial production in May and June.
Investors will now turn their attention to Eurozone Sentix confidence data. Analysts are predicting that investor sentiment remains downbeat in June, which could prevent any meaningful move higher for the common currency.
The US Dollar was trading approximately flat versus its peers, pausing for breath after a steep selloff across the previous week.
On Friday, the closely watched US non-farm payroll jobs report showed that 2.5 million jobs were created in US in May, defying market expectations of -8 million job losses and significantly down from April’s revised 20 million job losses. Additionally, the unemployment rate fell from 14.7% to 13.3% in May.
The data showed that the US economy was more resilient to the coronavirus crisis than analysts had originally expected. This boosted optimism in the market, dragging on demand for the safe haven US Dollar.
At the start of the new week, optimism is fading slightly as investors await the next catalyst. With no high impacting US data due for release, investors will look ahead to Federal Reserve monetary policy announcement on Wednesday. Investors will be looking for clues as to what the astonishing jobs report means for US monetary policy.
