EUR/USD has started the week with losses, continuing the downward trend seen on Friday. In the Monday session, the pair is trading at 1.1926, down 0.30% on the day. On the release front, eurozone data disappointed. Germany Factory Orders declined 0.9%, missing the estimate of a 0.5% gain. Eurozone Retail PMI dropped to 48.6, marking the first contraction since March 2017. As well, Eurozone Sentix Investor Confidence dipped to 19.2, well short of the forecast of 21.2 points. This marked a fourth straight drop. There are no major releases in the US. On Tuesday, Germany releases Industrial Production and Trade Balance, and the US publishes PPI and JOLTS Job Openings. We’ll also hear from Federal Reserve Chair Jerome Powell, who will speak at an event in Zurich.
German numbers are raising concerns about the strength of the eurozone’s largest economy. German Factory Orders posted a second decline in the past three months, pointing to weakness in the manufacturing sector. The markets will be hoping for better news from Industrial Production on Tuesday, with an estimate of 0.8%. The indicator has posted three straight declines. Last week’s PMI reports also disappointed. German Services PMI was the weakest since September 2016, and the eurozone reading also softened compared to March. This points to weaker expansion in services business activity, another indication of weaker eurozone growth in the first quarter of 2018. Manufacturing PMI weakened for a fourth consecutive month in April, and retail sales posted a fourth straight decline.
US employment numbers were mixed on Friday, but the euro was unable to make any headway. In the US, nonfarm payrolls rebounded with a gain of 164 thousand, although this fell short of the estimate of 190 thousand. Wage growth remained dropped from 0.3% to 0.1%, missing the estimate of 0.2 percent. There was some good news from the unemployment rate, which dropped to 3.9%, beating the estimate of 4.1%. The Fed will likely be pleased that nonfarm payrolls were not red hot, as they April report justifies its policy of gradual rate hikes.
