German data and Italian news have weighed on the common currency today. The German February manufacturing orders slumped -4.2% m/m in February. Expectations had been for a modest rebound from the correction in January, but while that number was revised up slightly to -2.1% m/m, the February number came in much weaker than anticipated. The breakdown showed both foreign and domestic orders inflow falling sharply, although the former underperformed and declined -6.0% m/m, after already falling -2.6% m/m in January, which highlights again that the German manufacturing sector in particular is being hit by rising protectionism worldwide and the ongoing uncertainty on the Brexit front. The three-month trend rate is now at -2.2% and the annual rate at -8.4%, which will revive recession fears as it seems only a matter of time until the slump in manufacturing will translate into job losses and drag the overall economy down as well. Much will depend on how geopolitical tensions and Brexit develop, but for now the situation looks pretty bleak, at least for manufacturers.
Meanwhile Bloomberg¹ are reporting that Italy has cut its growth forecast to 0.1% from 1%. The government’s official growth forecast looked overly optimistic even before there was a wide range of downgrades across Europe so this hardly comes as a surprise. It will throw the budget plans into disarray again and while the EU’s Juncker has been pushing for Italy to implement growth boosting measures, in Italy’s case that should not mean increased deficit, but structural reforms.
EURUSD has been capped at 1.1250 with a floor at below the key 1.2000 at 1.1185 this week. Narrow ranges have persisted today too with the 1.1250 resistance holding at the 200-period EMA, support at the daily pivot point has been breached in the last few hours and into the US cash open.
Overall, EURUSD remains rangebound ahead of the Non-Farm Payroll data tomorrow and a potential Trump-Xi summit announcement later today.
¹https://www.bloomberg.com/news/articles/2019-04-03/italy-s-populists-ready-growth-decree-critics-are-underwhelmed
Meanwhile Bloomberg¹ are reporting that Italy has cut its growth forecast to 0.1% from 1%. The government’s official growth forecast looked overly optimistic even before there was a wide range of downgrades across Europe so this hardly comes as a surprise. It will throw the budget plans into disarray again and while the EU’s Juncker has been pushing for Italy to implement growth boosting measures, in Italy’s case that should not mean increased deficit, but structural reforms.
EURUSD has been capped at 1.1250 with a floor at below the key 1.2000 at 1.1185 this week. Narrow ranges have persisted today too with the 1.1250 resistance holding at the 200-period EMA, support at the daily pivot point has been breached in the last few hours and into the US cash open.
Overall, EURUSD remains rangebound ahead of the Non-Farm Payroll data tomorrow and a potential Trump-Xi summit announcement later today.
¹https://www.bloomberg.com/news/articles/2019-04-03/italy-s-populists-ready-growth-decree-critics-are-underwhelmed