Eurozone Trade Data Provides EUR Support as Industrial Production Sinks

It’s a relatively busy day on the Eurozone economic calendar today. Eurozone industrial production and trade data were in focus in the early part of the European session.

Industrial Production Takes a Hit

In December, industrial production fell by 1.6%, partially reversing a 2.6% increase from November. Economists had forecast a 1.0% decline.

Year-on-year, production was down by 0.8%, which was worse than a forecasted 0.3% decline and November’s 0.6% fall.

According to Eurostat,

• The production of capital goods fell by 3.1% and non-durable consumer goods by 0.6%.
• Providing some support, however, was a 0.8% increase in the production of durable consumer goods, and 1% rise in the production of intermediate goods.
• Energy production was also on the rise, increasing by 1.4% in the month.
• Industrial production in Belgium fell by 1.9% to lead the way down.
• Portugal (+1.8%), and Estonia and Luxembourg (both +1.6%) reported the largest increases.
• In December 2020, compared with December 2019, industrial production was down by 0.8%.

Eurozone Trade Data

While industrial production figures disappointed, trade data provided support to the European majors and the EUR.

In December, the trade surplus widened from €25.7bn to €29.2bn. Economists had forecast a narrowing to €25.3bn.

According to Eurostat.

• Euro area exports to the rest of the world increased by 2.3% to €190.7bn compared with Dec-19.
• This was reportedly the first increase in exports since Feb-20.
• Imports from the rest of the world fell by 1.3% to €161.5bn, however.
• Intra-euro area trade increased by 0.9% to €148.7bn compared with Dec-19.
• In January to December 2020, euro area exports to the rest of the world slid by 9.2% to €2,131.4bn when compared with Jan-Dec 2019.
• Imports from the rest of the world tumbled by 10.8% over the same period when compared with Jan-Dec 2019.
• Intra-euro area trade fell by 8.9% to €1,797.0bn in Jan-Dec 2020 when compared with Jan-Dec 2019.

Market Impact

Following some disappointing stats last week, the EUR had found some early support this morning. The EUR had hit a current day high $1.21452 before taking a hit in the run up to this morning’s data release.

In response to this morning’s economic data, the EUR slipped from $1.21346 to a post release low $1.21327 before finding support.

Further downside could be on the cards, however. The fall in imports suggests weak demand that could raise concerns over what lies ahead in January.

The good news, however, is that market hopes of a speedy economic rebound remain a cushion for the EUR and riskier assets.

At the time of writing, the EUR was up by 0.13% to $1.21349.

For the European majors, the DAX30 and the EuroStoxx600 had hit day highs ahead of the data release.

The DAX30 and the EuroStoxx600 had been up by as much as 0.49% and 0.85% respectively.

Following the data release, the DAX30 was up by just 0.20% The EuroStoxx600, however, was up by 0.79%, just off its current day high.