Highlights
- German industrial production slid by 1.6% in December.
- Industrial production fell for an eighth successive month, aligning with the weak demand environment.
- Next up, US trade data and Fed speakers Thomas Barkin, Susan Collins, and Adriana Kugler.
On Wednesday, the German economy was in the spotlight after the unexpected surge in factory orders.
German Industrial Production
German industrial production slid by 1.6% in December after declining by 0.2% in November. Economists forecast industrial production to fall by 0.4%. However, industrial production was down 3.13% year-over-year in December compared to 4.37% year-over-year in November.
German Economy and the ECB
Economic indicators from Germany continue to signal a Q1 2024 economic recession. German factory orders unexpectedly surged 8.9% in December after stalling in November. However, German trade data signaled a sharp deterioration in the demand environment. January PMI numbers also indicated a contraction across the private sector.
There is a growing concern the German economy can drag the Eurozone economy into a recession. Weaker-than-expected numbers raised investor bets on an April ECB rate cut.
The industrial production numbers further supported expectations of a Q1 economic recession. Nonetheless the jump in factory orders could offer relief ahead of the January production figures.
EUR/USD Reaction to German Industrial Production
Before the German industrial production numbers, the EUR/USD fell to a low of $1.07487 before rising to a high of $1.07664.
However, in response to the numbers, the EUR/USD fell to a low of $1.07609 before rising to a high of $1.07673.
On Wednesday, the EUR/USD was up 0.12% to $1.07670.
Next Up
On Wednesday, French trade and employment figures will draw interest before retail sales data from Italy.
Later in the session, US trade data will also garner investor interest. However, central bank commentary will likely be the focal point. FOMC members Adriana Kugler, Thomas Barkin, and Susan Collins could skew bets on a May Fed rate cut.
