German Factory Orders overview
The German data scheduled for release at 06:00 GMT is expected to show Factory Orders rose by 0.3% month-on-month in November, having dropped by 0.4% in the preceding month. In year-on-year terms, factory orders are forecasted to have slipped by 5.5%.
Manufacturing PMI hit a five-month high in November
The headline IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy – rose to a five-month high of 44.1 in November from 42.1 in October.
While the gauge remained in the contraction territory below 50 for the 10th straight month, the pace of decline in the new orders eased for the second month running, showing the smallest reduction since January, according to the official report. Further, the rate of job cuts was the weakest for three months.
Factory Orders, therefore, may have registered moderate growth in November, as forecasted by economists. That said, big beat on expectations looks unlikely as the overall activity was still subdued by historical standards.
Impact on EUR/USD
A positive figure will likely strengthen the narrative that the German economy has bottomed out and could help EUR/USD re-test resistance at 1.1206 (lower high created on Monday).
The euro will likely take a beating if the data falls short of expectations by a big margin.
About German Factory Orders
The Factory orders released by the Deutsche Bundesbank is an indicator that includes shipments, inventories, and new and unfilled orders. An increase in the factory order total may indicate an expansion in the German economy and could be an inflationary factor. It is worth noting that the German Factory barely influences, either positively or negatively, the total Eurozone GDP. A high reading is positive (or bullish) for the EUR, while a low reading is negative.