Euro Flat-to-Higher Despite Slump of German Manufacturing Orders

The euro was flat today and even gained on some of its rivals despite the slump of German manufacturing orders. The likely reason for the decent performance was the positive market sentiment.
The Federal Statistical Office reported the German manufacturing orders dropped by 2.1% in December from the previous month. The actual reading was far worse than an increase of 0.6% predicted by analysts. On a more positive note, the previous month’s decline got a revision from 1.3% to 0.8%. Year-on-year, the indicator slumped by 8.7%.
The European Central Bank noted in its Economic Bulletin released today:

In particular, the weakness in the manufacturing sector remains a drag on euro area growth momentum.

Nevertheless, the outlook for the eurozone economy was not particularly bad:

Incoming information since the last Governing Council meeting in early December is in line with the Governing Council’s baseline scenario of ongoing, but moderate, growth of the euro area economy.

The outlook for the global economy was also decent:

Global economic activity remains moderate, but there are signs of stabilisation. In particular, the global manufacturing sector firmed in the last quarter of 2019, while the services sector remained broadly stable.

The ECB stated that it will keep its monetary policy highly accommodative:

In the light of the continued subdued inflation outlook, the Governing Council reiterated the need for a highly accommodative stance of monetary policy for a prolonged period of time to support underlying inflation pressures and headline inflation developments over the medium term.

Market participants were waiting for economic forecasts from the European Commission today but the report has been delayed till Tuesday next week.
Now, traders wait for tomorrow’s data on industrial production and trade balance in Germany and France as well as retail sales in Italy.
EUR/USD traded near its opening level of 1.0999 as of 11:29 GMT today after rising to the daily high of 1.1014. EUR/GBP climbed from 0.8458 to 0.8484. EUR/CHF advanced from 1.0708 to 1.0713, touching the high of 1.0723 intraday.

If you have any questions, comments, or opinions regarding the Euro, feel free to post them using the commentary form below.

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