Overview – German Industrial Production
Germany, Eurozone’s economic power-house, will publish its industrial production figures for the month of February at 0600 GMT today.
The data is expected to show that the industrial sector activity rebounded 0.5% m/m in February versus a 0.8% drop seen in January while on an annualized rate, the industrial output had dropped 3.3% in January.
It’s worth noting that the German factory orders disappointed in February again, falling for the fourth straight month, mainly due to the negative impact of a global trade war, with exports and manufacturing activity particularly hard-hit.
Meanwhile, the German Economy Ministry noted earlier this week that “manufacturing momentum will continue to be subdued in the coming months, particularly due to lacking external demand”.
How could it affect EUR/USD?
Despite the latest recovery in the German 10-year bond yields, German recession fears continue to haunt the markets, with the risks skewed to the downside for the EUR/USD pair, as it trades near yearly lows heading into the key US payrolls data due later on Friday.
A negative surprise in the German industrial figures would intensify these fears, knocking-off the EUR/USD pair to 2019 lows of 1.1177, a break below which the sellers would gain momentum targeting the June 2017 lows of 1.1120.
On the other hand, a better-than-expected reading could alleviate concerns of a slowdown in the Eurozone’s largest economy, extending the minor corrective bounce towards 1.1250 levels, beyond which a test of 1.1300 looks likely.
Key Notes:
EUR/USD analysis: heading into the US NFP report at yearly lows
ECB rate hike timing pushed further back again – Reuters poll
US: Nonfarm payrolls to increase 190k in March – Goldman Sachs
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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