The euro drew some relief yesterday following as German factory orders unexpectedly increased in March, in what was otherwise a quiet day regarding release of economic data.

The euro drew some relief yesterday following as German factory orders unexpectedly increased in March, in what was otherwise a quiet day regarding release of economic data.

The euro traded higher against the pound and the US dollar yesterday morning following the release of data which confirmed an increase of 2.2% in factory orders for March from Germany. Following comments made by Mario Draghi on Monday, euro movements are going to be even more data sensitive than before as markets will look to assess how the European Central Bank will act next – release of poor data may make the ECB lower interest rates further.

The only other notable move in the currency markets came from the US dollar as it traded stronger against both the pound and the euro following comments made by former US president Bill Clinton that a deficit deal would lift a ‘huge burden’ on the US economy. However the US dollars gains were limited as heightened risk appetite continues to buoy the markets; the UK’s FTSE 100 closed at a 5 ½ year high yesterday.

From the UK we have had mixed data. Last night the British Retail Consortium revealed that sales unexpectedly declined in April by 2.2%; the market had anticipated an increase of 1.9%. However a separate report from Halifax this morning revealed that house prices increased by 1.1% in April against a forecasted rise of 0.1%.

We saw the New Zealand dollar weaken overnight after Reserve Bank Governor Graeme Wheeler confirmed that the central bank sold the New Zealand dollar in order to protect economic growth and to allow exporters to remain competitive in international trade. Wheeler also suggested that the central bank would be willing to take further action if they see fit.

The only notable data due for release today comes in the form of German industrial production, which is forecasted to have decreased by 3.8% in March, this could potentially cause the euro to weaken and thus we could see GBPEUR higher today.

Key Announcements:

11.00am – EUR – German Industrial Production (YoY) (Mar): Expected to decline to -3.8%.

13.15pm – CAD – Housing Starts (YoY) (Apr): Expected to decline to 175,000.

23.45pm – NZD – Unemployment Rate (Q1): Expected to decrease to 6.8%.