German Economic Data to Put the EUR in the Spotlight

It could be a choppy day ahead for the majors, with economic data out of Germany and geopolitics in focus on the day.
Bob Mason
Currency exchange notice board

Earlier in the Day:

Economic data was on the lighter side through the Asian session this morning. Japan’s factory orders and current account numbers for May provided direction early on.

While the numbers drew attention, the markets also reacted further to Friday’s U.S nonfarm payroll figures.

For the Japanese Yen

Core machinery orders fell by 3.7% in May, year-on-year, which was less than a forecasted 3.9% decline. In April, orders had increased by 2.5%. Month-on-month, orders slid by 7.8%, which was worse than a forecasted 4.7% fall. Orders rose by 5.2% in April. The figures were released by the Cabinet Office.

In May, Japan’s current account surplus narrowed from ¥1.707tn to ¥1.595tn, which was better than a forecasted narrowing to ¥1.385tn.

The Japanese Yen moved from ¥108.50 to ¥108.486 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.06% to ¥108.53 against the U.S Dollar.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.11% to $0.6635, while the Aussie Dollar was up by 0.04% to $0.6983.

In the Asian equity markets, the Nikkei was down by 0.71%, with the ASX200 down by 0.84%, the pair under pressure following Friday’s NFP numbers.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar.

Germany trade and industrial production figures for May will provide direction in the early part of the day.

Factory orders saw 2 consecutive monthly gains in March and April, which should support production in spite of a continued decline in new orders. The latest manufacturing PMI surveys continued to report falling backlogs. The numbers are unlikely to be particularly impressive, however, with the auto sector weakening.

Outside of the numbers, any escalation in the Middle East and updates from the U.S – China trade talks will also need to be considered.

At the time of writing, the EUR was up by 0.01% to $1.1226.

For the Pound

It’s a quiet day ahead, with no material stats due out of the UK today.

The focus will remain on the leadership race ahead of tomorrow’s live televised debate, where Johnson and Hunt go head to head.

Conservative party members will have received their postal ballots and some will have voted ahead of the debate. Any signs of where the support sits will also have an impact.

Any upside for the Pound will be limited as economic indicators begin to flash red following the pre-Brexit activity in the 1st quarter.

At the time of writing, the Pound was up by 0.05% to $1.2527.

Across the Pond

There are no material stats due out of the U.S to provide the Greenback with direction. The markets will be looking ahead to FED Chair Powell’s testimony to Congress on Wednesday. The FED Chair is expected to be grilled on policy and the state of the economy.

Through the latter part of the day, any updates from the Oval Office on trade talks will need to be considered. There’s also Iran to factor in. Any threat of war would provide support for the Dollar.

At the time of writing, the Dollar Spot Index was down by 0.04% to 97.246.

For the Loonie

It’s a quiet day ahead, with no material stats due out of Canada. Any upside for the Loonie will be limited ahead of the Bank of Canada’s interest rate decision on Wednesday.

Crude oil prices and any chatter on Iran will have some influence on the day.

The Loonie was up by 0.06% to C$1.3073, against the U.S Dollar, at the time of writing.

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