EUR/USD has inched lower in the Thursday session. Currently, the pair is trading at 1.2363, down 0.03% on the day. On the release front, there are no eurozone or German indicators. French Final CPI edged up to 0.0%, beating the estimate of 0.1%. In the US, unemployment claims is expected to drop to 227 thousand, and the Philly Fed Manufacturing Index is forecast to fall to 23.1 points. On Friday, Germany releases the Wholesale Price Index and the eurozone will publish Final CPI. The US will release Building Permits, Housing Starts and Preliminary UoM Consumer Sentiment.
The eurozone economy continues to improve, but manufacturing indicators for January pointed downwards in Germany and the eurozone. Eurozone Industrial Change declined 1.0% in January, its sharpest drop since December 2016. The estimate stood at -0.4%. Last week, German numbers disappointed. Factory Orders in January plunged 3.9%, worse than the estimate of -1.9%. This marked the second decline in the past three months. This was followed by a decline of 0.1% from Industrial Production, marking a second straight decline. The reading was well off the forecast of 0.6%. The latest numbers are somewhat surprising as the German economy remains very strong, and has led the way as eurozone economy continues to expand.
German Chancellor Angela Merkel was elected to a fourth term on Wednesday, as Germany finally has a government in place, after an inconclusive election in September. However, Merkel will have her work cut out for her in what could be her last stint as leader of the eurozone’s largest economy. Merkel’s stature has diminished after a poor election, and she will preside over a fractured coalition. The vote in the German parliament was 364 to 315. Merkel was forced to give the SDP the finance and foreign ministry portfolios, so we can expect the new government to be more supportive of eurozone integration, including assistance for weaker eurozone members.
