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The news that the Chinese authorities intend to halve duties on American goods did not greatly affect the markets, providing only slight support for the European currency in the morning.
As indicated in the message of the Ministry of China, China will reduce duties on imported US goods to 5% from 10% from February 14 this year. In addition, duties will be reduced for a number of goods to 2.5% from 5%. The total duties will be reduced by $ 75 billion, as was noted in the recently signed trade agreement.
However, the optimism of euro buyers quickly faded after data showing a continuing problem in the manufacturing sector in Germany, which is going through hard times. A number of experts have already hurried to declare that production is beginning to recover gradually, as evidenced by the PMI for this sector, published at the beginning of the week, but it is still very, very early to talk about real changes. Thus, this is supported by a report on a sharp reduction in orders in the German manufacturing sector last December.
According to the German Federal Bureau of Statistics Destatis, German manufacturing orders in December declined immediately by 2.1% compared with the previous month after declining by 0.8% in November. At the same time, economists had expected orders to increase by 0.7%. But compared to the same period of the previous year, orders in the manufacturing sector declined by 8.7%.
The only thing the economy has to rely on is domestic orders, which continue to show stable growth, keeping the indicator from a larger decline. The report indicates that domestic production orders in December 2019 increased by 1.4%, but external ones immediately declined by 4.5%. Tomorrow, we will follow with you the German industrial production report for December this year, which will complement the big picture.
Moreover, the outbreak of coronavirus in China adds to the problems, which will affect the situation in the manufacturing sector of Germany and delay the restoration of activity. However, a small reassurance for economists is the fact that the data at the end of last year and the beginning of this is subject to volatility in connection with the celebration of Christmas and they must be trusted with some caution.
As for the technical picture of the EUR/USD pair, it remained completely unchanged compared to the morning forecast. I noted that the euro stopped at 1.0990, and a lot depends on this range. If the bulls fail to keep this area, then the pressure on risky assets will most likely resume with renewed strength, which will lead to the renewal of the lows 1.0965 and 1.0940. On the other hand, if consolidation around the level of 1.0990 confirms a major limit player, then a trading instrument may rebound to the resistance area of 1.1025 and 1.1050.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
Performed by Eder Anderson,
InstaForex Group © 2007-2020
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