The Euro resumed its uptrend, despite the fact that industrial new orders from the Euro-zone were released slightly below estimates at 5.1 percent. While the sector continues to perform well, output has started to slump to a slower pace of growth.
The high value of the national currency is just starting to crimp investment demand in the region, but the real effects of the Euro’s strength may not been reflected in trade data for several months, as many producers may be hesitant to pass through the actual exchange rate in fear of weighing down demand. Nevertheless, profit margins can only thrive for so long under those conditions, and the practice is unlikely to continue for much longer. Looking ahead, manufacturing PMI is anticipated to fall back slightly – in line with the industrial new orders release – while services PMI is forecasted to be a bit more resilient as domestic demand remains buoyed amidst tight labor market conditions. Furthermore, the ECB’s José Manuel González-Páramo will speak in the morning, and any hawkish commentary will help maintain the Euro’s bid tone.