German Factory Orders Surge In January; Euro Remains Lower
German manufacturing orders recovered in January from their December slump with a strong 2.9% month-on-month reading vs. (a revised lower) -3.6% beating forecasts of 2.4%. The rebound was driven by continued growth in domestic demand orders which rose a healthy 4.5% month-on-month, while foreign orders lagged a little rising on 1.6%. As German businesses continue to hire workers to meet booming export demand domestic demand should continue to growth solidly underpinning factor order growth.
The euro was relatively unmoved by the better than forecast readings and remains offered on the day as traders shift focus away from potential ECB rate hikes to concerns that the EMU debt crisis could worsen. Yesterday’s bearish close coupled with failure to close above 1.40 got the euro off on the backfoot from the start today as the spotlight moves back onto periphery nations. As such, we see the potential for a top to be forming in Eur/Usd and the potential for a measured move lower in coming days with 1.3845 and 1.3755 as downside targets.
Written by Jonathan Granby, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.