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EUR/USD Exchange Rates Slides as German Factory Output Slides

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Larger than Expected Slide in German Industrial Production Pressures EUR/USD

The Euro US Dollar (EUR/USD) exchange rate is tumbling this morning as Germany’s industrial production figures came in below expected.

At the time of writing EUR/USD is down 0.25% from its opening levels this morning, having fallen nearly half a cent following the release of Germany’s disappointing industrial figures.

Euro (EUR) Stumbles as Germany Industrial Output Slides

The Euro was put on the back foot against the US Dollar this morning as Germany’s industrial production fell faster than expected in December.

According to Germany’s Federal Statistics Office, Destatis factory output growth slumped from a downwardly revised 3.1% to -0.6% at the end of last year, slipping past expectations it would only reach -0.5%.

The drop appeared to be driven by reduced demand for consumer goods as well as subdued construction activity.

However despite the decline in December economists suggest that output in 2017 as a whole was strong and that this is likely to continue into 2018.

Analysts at Destatis said;

‘Industrial output was very dynamic in the course of 2017 but has lost some momentum lately.’

‘Nonetheless, production is clearly pointing upward, and in light of strong orders in December and good sentiment indicators, strong manufacturing momentum can be expected in the coming months.’

US Dollar (USD) Parts Gains as Markets Jump on the Japanese Yen (JPY)

At the same time while the US Dollar is up this morning, the currency has fallen back from its best levels struck on Tuesday.

This comes as markets air towards caution following the huge sell off in stocks at the start of the week and investors flocking to the Japanese Yen (JPY), which was perceived to be undervalued.

EUR/USD Forecast: Fed Policymakers to Hint at Four Rate Hikes in 2018?

Looking ahead the EUR/USD exchange rate could slide even further this afternoon as following a slew of speeches by Federal Reserve policy makers.

There has been considerable speculation this week about the possibility of the Fed accelerating the pace of its monetary tightening and investors will be keen to learn if members of the bank are supportive of the idea of up to four rate hikes this year.

Meanwhile the Euro could face further losses on Thursday will the publication of Germany’s latest trade balance, with economists forecasting that the country’s trade surplus will have narrowed in December.