Euro remains elevated amid weak German factory orders
Europe’s common currency remained elevated Wednesday amid a spate of disappointing data from Germany and France.
German factory orders declined 2.8 percent in March, following a gain of 0.9 percent the prior month, the Federal Statistics Office reported today. Economists forecast a gain of 0.3 percent. Year-on-year, factory orders rose 1.5 percent, following an annualized gain of 6.5 percent in February.
In France, factory data also disappointed the markets. French industrial output declined 0.7 percent in March, following a gain of 0.1 percent the prior month, the Institut national de la statistique et des etudes economiques reported today. Economists forecast a gain of 0.2 percent.
France’s trade deficit widened in March, from €-3.8 billion to €-4.9 billion. French exports increased from €36.2 billion to €36.4 billion, and imports increased from €39.6 billion to €41.3 billion.
In US data, mortgage applications rose 5.3 percent last week, the Mortgage Bankers Association reported today.
Productivity of US workers fell 1.7 percent in the first quarter, following a gain of 2.3 percent over the previous three month period, the Labor Department reported today. Unit labour costs, which measure the total cost of employing the workforce, increased 4.2 percent in the first quarter, official data showed.
The EURUSD pair traded within a tight range of 1.3912-1.3937, consolidating in the middle at 1.3928. The euro took advantage of the US dollar’s broad weakness Tuesday to climb to seven-week highs. Initial support is likely found at 1.3899, followed by 1.3864 and 1.3830. On the upside, technical resistance is found at 1.3980, 1.4015 and 1.4050.
In other trading, the euro was treading water against the British pound. The EURGBP consolidated at 0.9209, relatively unchanged from the previous close. Initial support is likely found at 0.8182. On the upside, technical resistance is found at 0.8218.
Monetary policy takes centre stage in the back half of the week. Federal Reserve Chair Janet Yellen will testify before the Joint Economic Committee of US Congress later today. Investors will use her testimony to determine the central bank’s outlook on interest rates.
The European Central Bank will coalesce in Brussels on Thursday to discuss monetary policy and set the interest rate. Stubbornly low inflation has posed a significant problem for policymakers, who are considering all options to shore up declining consumer prices. April marked the seventh consecutive month consumer inflation was below 1 percent.
Deflationary pressures forced the ECB to slash interest rates to record lows in November. However, inflation is still at less than half of the central bank’s target. ECB officials are reportedly considering Federal Reserve-style quantitative easing and a negative deposit rate to shore up consumer prices. According to experts, another rate cut from 0.25 percent to, say, 0.1 percent, would have only a minimal effect.
The ECB is likely to hold the interest rate at 0.25 percent at tomorrow’s meetings, according to a consensus of market analysts.
- Mellanox Provides Leading Application Performance with FDR InfiniBand for HPC-Purpose Built Dell PowerEdge C4130 1 view
- Harris Warsaw Joins Pitney Bowes as Senior Vice President of Sales, Global SMB Solutions 1 view
- US Housing Data Steps into the Spotlight 1 view
- Steady Reading On French Inflation 1 view
- AUD/USD climbs ahead of the Reserve Bank of Australia 1 view
- Sam’s Club to Offer LifeLock(R) Identity Theft Protection 1 view
- FOREX Watch: US dollar breaks sticking point 1 view
- Turkcell Introduces the Future of TV with Its Expanded Turkcell TV+ 1 view
- Visa Falls Despite Revenue Gains 1 view
- Dex Media and Yext Sign Agreement to Expand Small Business Internet Marketing Offerings 1 view
|Forex Broker Spreads »|
|Most Popular Articles »|
- Christopher Brody to Step down From Intuit Board of Directors; Richard Dalzell Nominated 1 view
- US Industrial Production Growth Stalls 1 view
- LNB Bancorp, Inc. Shareholders Vote to Approve Merger with Northwest Bancshares Inc. 1 view
- Sterling Slides as Minutes Reveal Hawkish Central Bank that is Not Yet Ready to Act 1 view
- US Dollar Steadies at 6-Year Highs 1 view
- Philips Selects Revolutionary Voice Recognition Software from VoiceItt as Winner of Annual Innovation Fellows Competition 1 view
- US Pension Fund Fitness Tracker: No Reversal in Q4, Funding Ratios Decline for Fourth Consecutive Quarter 1 view
- Exactech Launches Octane(R) Elevate Peek Spacer System For Lumbar Interbody Fusion Procedures 1 view
- Euro Declines on Weak PMI Ahead of Jobs Report, RSI is Oversold 1 view
- JPY weaker on BoP, SEK inflation in focus 1 view