German Factory Orders Return to Growth
THE TAKEAWAY: Euro-zone GDP declined 0.2% in 2Q according to revised estimate -> ECB to decide on monetary action today -> Euro trading slightly higher
German factory orders rose 0.5% (seasonally adjusted) in July, beating expectations and reversing June’s revised 1.6% drop in manufacturing orders. Factory orders were 4.5% lower than July of 2011, according to the Economy Ministry.
Orders from within Germany were 1.0% higher while foreign orders were only 0.1% higher. Manufacturing demand from other Euro-zone economies fell 0.6%.
The German government said Euro-area orders seem to have stabilized, and the German economy still grew 0.3% in the second quarter despite a Euro-area wide GDP decline, thereby showing a resilience to the surrounding contraction.
The Euro-zone economy has been suffering because of the Euro debt crisis, and a lower GDP should be currency negative. Later today, the ECB will release its decision on the interest rate for September, most analysts expect the central bank to cut the rate 25 basis points to 0.50%. Additionally, ECB President Draghi will hold a press conference following the release, where he could announce the details of a bond purchasing program.
The Euro did not significantly react to the higher than expected factory orders, and anticipation for the ECB announcement has sent the single currency higher in today’s trading. Earlier today, EURUSD crossed above 1.2600, where the pair has experienced resistance over the past few weeks. Possible resistance could be provided by a month-long upward trend channel around 1.264.
EURUSD 15-minute: September 6, 2012
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