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EUR/USD Shrugs Off Weaker-Than-Expected Industrial Production Data as Fed Looms

EUR/USD Shrugs Off Weaker-Than-Expected Industrial Production Data as Fed Looms

Nick Cawley, Senior Strategist

Talking Points

- Euro-Zone industrial production contracts month-on-month in October.

- Recent manufacturing data paint a slightly better picture.

- All eyes are on the Federal Reserve later in the day.

Eurozone industrial production (IP) growth edged into negative territory in October, missing analysts’ expectations of a small positive outturn. The lagging indicator showed IP contracting by 0.1% against expectations of +0.2% and the prior month’s -0.9%.

According to Eurostat, the decrease in October compared with September is due to production of non-durable consumer goods falling by 1.5% and intermediate goods by 0.5%, while production of energy rose by 0.8%, capital goods by 1.0% and durable consumer goods by 1.5%.

On an annual basis, IP increased by +0.6% in October, missing expectations of +0.8%, and lower than an upwardly revised +1.3% in September. Industrial production rose in Spain by +0.3% and Germany by +0.1% while production fell in France by -0.2% and Italy remained flat on the month.

Despite the weak numbers, the Eurowas almost unchanged as traders balance today’s weak numbers against PMI manufacturing survey evidence for November that showed activity rising to a 34-month high.Financial markets are also keen to hear what Federal Reserve Chair Janet Yellen has to say later today at the final FOMC meeting of the year. With expectations of a 0.25% rate hike fully priced into the market, traders hope that Yellen’s press conference may give some clues to the Fed’s thoughts on additional rate hikes in 2017.

Chart: EURUSD 5-minute (December 14)

--- Written by Nick Cawley, Analyst

--- To contact Nick, email him at Nicholas.cawley@ig.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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