The German economy was in the spotlight on Thursday (June 6) after the upward trends in the private sector PMIs. While continuing to contract, the Manufacturing PMI increased from 42.5 to 45.4 in May, increasing the market focus on demand.
German Factory Orders
German factory orders fell by 0.2% in April after falling by 0.4% in March. Economists forecast factory orders to rise by 0.3%.
German Factory Orders Unlikely to Influence the ECB
The weakening demand for German goods will unlikely influence the ECB monetary policy decisions. The manufacturing sector contributes less than 30% to the German economy.
Wage growth trends, service sector activity, and inflation remain the focal points.
Nevertheless, the fall in factory orders aligned with recent Manufacturing PMI surveys that signaled a continued decline in new orders, albeit at a less marked pace.
EUR/USD Reaction to the Economic Indicators from Germany
Before the release of factory order numbers, the EUR/USD fell to a low of $1.08647 before climbing to a high of $1.08957.
In response to the factory order numbers, the EUR/USD fell from $1.08848 to a low of $1.08806.
On Thursday, the EUR/USD was up 0.14% to $1.08836.
060624 EURUSD 3 Minute Chart
Next Up
Eurozone retail sales figures will warrant investor attention early in the European session. Economists forecast retail sales to fall by 0.3% in April after increasing by 0.8% in March. A larger-than-expected fall in consumer spending could signal a softer inflation outlook and a more dovish ECB rate path.
While the numbers need consideration, the ECB interest rate decision and press conference will be the focal point.
The markets expect the ECB to cut interest rates by 25 basis points. However, recent inflation figures from the euro area fueled uncertainty about post-June monetary policy goals. Barring a surprise ECB decision to leave interest rates unchanged, the markets will focus on the ECB press conference and forward guidance.
While the ECB press conference will be the focal point, US labor market data will draw investor interest.
Economists forecast initial jobless claims will increase from 219k to 220k in the week ending June 1.
This article was originally posted on FX Empire
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