THE TAKEAWAY: EUR German Factory Orders (JUN) > Orders fall by more than twice expected > EURUSD BULLISH
Regardless if the Euro-zone sticks together, the region is headed for a period of poor economic growth. That hypothesis was put to the test today, and passed, upon the latest batch of German Factory Orders data from June. The German Economy Ministry report showed that orders fell by more than twice what was expected, contracting -1.7% versus -0.8% expected on a monthly-basis, as orders from Germany’s Euro-zone trading partners dropped. According to a Bloomberg News survey, the year-over-year decline of -7.8% was in line with expectations.
Indeed, after today’s two big pieces of data out of Europe – German Factory Orders for June and Italian GDP for the second quarter – it’s clear that recession is sliding in across the continent. The Italian economy slumped by another -2.5%, and with German Factory Orders to Euro-zone countries sliding by -4.9%, it looks like the crisis is starting to materially impact the core.
EURUSD 1-minute Chart: August 7, 2012
Charts Created using Marketscope – Prepared by Christopher Vecchio
Perhaps in somewhat of a quizzical response, the Euro rose slightly against the US Dollar in the wake of the news, from 1.2401 prior to the release to as high as 1.2420 soon after. The EURUSD had fallen back slightly to trade at 1.2417, at the time this report was written.
--- Written by Christopher Vecchio, Currency Analyst
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