EUR/USD has started the week with slight gains. Currently, the pair is trading at 1.1238, up 0.20% on the day. In economic news, it’s a light data calendar, so we’re unlikely to see much movement from the pair on Monday. Germany’s trade surplus widened to EUR 18.7 billion but still feel short the forecast of EUR 19.0 billion. The eurozone Sentix Investor Confidence improved to -0.3, marking a four-month higher. In the U.S., the sole event is factory orders, which is expected to decline by 0.5%. On Tuesday, the U.S. releases JOLTS Jobs Openings.
The eurozone economy continues to sputter, and it hasn’t helped that the German locomotive has also lost a gear. Germany’s manufacturing sector has been hit hard with the fallout of the nasty global trade war. This has dampened demand for German exports, such as vehicles and auto parts. German manufacturing PMI is showing contraction and factory orders have declined for four straight months. However, there was positive news on Friday, as German industrial production posted a strong gain of 0.7%, ending a streak of four successive declines. The improvement is a result of a surge in construction, but with demand from abroad remaining soft, the manufacturing sector is likely to face further headwinds.
With the eurozone mired in a slowdown, there was no surprise over the dour tone of the ECB minutes on Thursday. Policymakers noted that economic data continued to be soft, highlighting the manufacturing sector. The minutes expressed concern about continuing global trade concerns, which has had a negative effect on the eurozone economy. As well, inflation is expected to remain low. With the ECB acknowledging that the economic outlook is poor, there is little likelihood of an interest rate hike before 2020. This will make the euro less attractive to investors.
