The euro has started with slight losses in the Monday session. Currently, EUR/USD is trading at 1.1999, down 0.25% on the day. On the release front, German Factory Orders disappointed, with a decline of 0.4%. This was well short of the estimate of a 0.1% gain. In the Eurozone, Sentix Investor Confidence improved to 32.9, above the estimate of 31.5 points. Retail Sales rebounded with a strong gain of 1.5%, beating the estimate of 1.4%. There are no major events out of the US. On Tuesday, Germany releases Industrial Production and Trade Balance. The US will publish JOLTS Job Openings.
The German economy continues to look strong, despite a soft Factory Orders report for December. Retail Sales soared 2.3%, its fastest pace since October 2016. Services and Manufacturing PMIs improved and continue to point to strong expansion. The labor market remains robust, as unemployment rolls dropped sharply. However, the political landscape in the eurozone’s largest economy remains cloudy. President Angela Merkel is now looking at the Social Democrats to help her make a new government, and preliminary talks are scheduled to begin on Sunday. The negotiations are likely to be lengthy, and the current caretaker government could remain in office for several more months.
The euro lost ground on Friday, after mixed US employment numbers. Nonfarm Payrolls dropped to 148 thousand, down from 228 thousand in the previous release. This was well below the estimate of 190 thousand. There was better news from wage growth, which edged up to 0.3%, matching the forecast. This marked a 3-month high. The unemployment rate remained unchanged, at a sizzling 4.1%.
