EUR/USD has posted losses in the Tuesday session. Currently, the pair is trading at 1.1884, down 0.33% on the day. On the release front, Germany posted strong numbers, as Industrial Production and Trade Balance both beat their estimates. The US will release JOLTS Jobs Openings and Federal Reserve Chair Jerome Powell will speak at an event in Zurich. Later in the day, US President Trump will announce whether the US will leave the nuclear agreement with Iran. On Wednesday, the US releases PPI reports.
The ECB cut its stimulus package at the start of the year from EUR 60 billion to 30 billion, while at the same time it extended the program to September. However, soft eurozone numbers, especially in Germany, have raised concerns that the bank may decide to again extend stimulus into 2019. German Factory Orders posted a second decline in the past three months, and the most recent PMIs in the services and manufacturing sectors also headed lower. On Tuesday, German numbers were solid, but this didn’t prevent the euro from dropping lower. Industrial Production climbed 1.0%, beating the estimate of 0.8% and ending a nasty streak of three straight declines. As well, Germany posted a trade surplus of EUR 22.0 billion, easily beating the estimate of EUR 19.9 billion. This marked a 4-month high.
The Federal Reserve’s newest regional Fed president, Thomas Barkin, delivered a major speech on Monday, and his tone was decidedly upbeat. Barkin said that the economy is “remarkably strong: above trend growth, low unemployment, inflation at target”. Barkin added that although the labor market is strong, it is not causing pressure on wages, but low unemployment should lead to an increase in inflationary pressures. As for upcoming rate increases, Barkin was careful to remain mum on how many rate hikes he expects this year. The Fed raised rates in March by a quarter-point and continues to forecast two additional increases this year. However, some policymakers are calling for three more hikes, given the strong health of the US economy.
