German industrial production dropped by 1.1% in June. Early expectations stood on a rise of 0.1%. The rise of 1.2% that was reported for May was revised to only 0.9%. Altogether, the locomotive of the euro-zone cannot drive the train in high speed anymore.
The reaction in EUR/USD is minor, as the markets focus on two other things: the raging and contagious debt crisis, and the upcoming release of Non-Farm Payrolls. The pair remains steady in a low range.
Yesterday’s release of German factory orders was quite different, and surprised with a nice rise. GDP figures for Q2 weren’t released yet in Germany. Italy has seen a weak growth rate of 0.3%, and Spain has seen a rise of only 0.2%.
Regarding the debt crisis, no hope has emerged yet. Rumors about ECB intervention to buy Spanish bonds don’t seem real. Yesterday, the ECB returned to the markets, but made only half-hearted moves: buying only doomed Irish and Portuguese bonds.
US Non-Farm Payrolls will take the central stage at 12:30 GMT. A gain of 90K is expected, but a smaller gain won’t be surprising. A loss of jobs will add to the troubled markets, and is absurdly likely to help the dollar against the euro – on safe haven flows. See the NFP preview for more.
EUR/USD is steady at 1.4140, under resistance at 1.4160, and above support at 1.4070. For more on the pair, see the EUR/USD forecast.