This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
EUR/USD lifted by German data
The jump in Germany factory orders for October helped EUR/USD recoup some of the losses it suffered overnight. It was a double victory for German factory orders, as the October report showed a 2.5% increase which easily exceeded the 0.6% estimate; the September reading was revised higher from a 0.8% increase to 1.1%.
The relative strength of the Germany economy explains why the nation is opposed to any drastic moves like QE and, as I stated before, the country usually gets its way when it comes to eurozone affairs.
Mario Draghi may not have announced any plans for government bond purchases yesterday, but the European Central Bank chief did cut eurozone growth and CPI forecasts for next year to 1% and 0.7% respectively. The previous guidance (announced in September) was for 1.6% and 1.1%, and these figures were noted by traders.
Today’s session will be dominated by the US jobs report, and trading is likely to be subdued prior to the announcement. The US dollar basket is at a four-year high and yesterday we saw a pullback, but a good jobs report could trigger a fresh round of buying.
EUR/USD could encounter resistance at the 200-hour moving average of $1.2428, and the bears will be looking to $1.23 as the downside target.