Euro (EUR) Exchange Rate Struggling after Surprise Drop in German Factory Orders
The Euro hit a nine-week low against the Pound (EUR/GBP) and fluctuated against the US Dollar (EUR/USD) after a report revealed an unforeseen fall in German factory orders.
If you're looking to make an international money transfer, we recommend TorFX.
Slumping domestic and overseas demand saw German factory orders plummet by 2.8 per cent in March, month-on-month, rather than advancing by the modest 0.3 per cent expected.
This result is proof of that fact that even the Eurozone’s largest economy isn’t back to performing at pre-crisis levels in all areas.
However, in the view of economist Andreas Rees; ‘A strong positive counter reaction in April is very likely.
‘The upward trend in the German manufacturing sector is intact with some transformation from solid foreign demand to stronger domestic growth forces.’
A separate report showed that the German construction sector drifted into contraction for the first time in almost a year.
It wasn’t all bad news for the 18 nation currency bloc today however as Eurozone, German and French Markit retail PMI advanced last month.
The Eurozone’s measure climbed from 49.2 to 51.2, pushing back above the 50 mark separating growth from contraction.
The German gauge came in at 53.1, up from 50.2 in March, and the French index produced a reading of 50.3, following a flat 50 the previous month.
Although the Eurozone retail sales PMI did indicate continued job shedding, there was modest growth in retail sales.
Markit economist Phil Smith said of the result; ‘Only German retailers reported growth of any notable kind in April, though the headline PMI numbers for France and Italy, at the very least, moved in the right direction.’
The Pound meanwhile remained broadly stronger against its peers thanks to yesterday’s unexpectedly upbeat UK service sector report.
Despite a lack of significant economic news from the UK on Wednesday, the GBP/EUR pairing pushed its way to a nine-week high.
Tomorrow both the Euro and the Pound could experience considerable movement as a result of central bank policy statements.
The Bank of England is expected to leave interest rates on hold and policy unaltered. However, if the central bank mentions last month’s UK employment and growth figures and delivers a hawkish statement Sterling could surge.
Similarly, the European Central Bank is forecast to leave policy unchanged in light of last week’s Eurozone CPI.
If this proves to be the case the Euro will be supported and could claw back losses against the Pound.
However, any surprise developments may have an adverse impact on the common currency’s exchange rate.
Currently the Euro is trading against the Pound in the region of 0.8209 and is trading against the US Dollar in the region of 1.3925