Euro Hits Fresh 11 Year Lows Ahead of ECB Announcement on QE


EUR/USD extended its decline into 11-year low, which left a low at 1.1026, before settling to choppy trade around 1.1050. Euro losses came as markets anticipate today’s ECB post-meeting press conference, which is expected to bring details of the QE program and a decision on the reinstatement of the Greek collateral waiver. German manufacturing orders came in worse than expected which further exacerbated the decline of the European currency.

German manufacturing orders fell 3.9% month over month in January, much more than expected, but with December revised up to 4.4% month over month this still is only a partial correction and encouragingly, domestic orders for capital goods, a gauge for future investment rose 0.4% month over month in January, after already rising 3.2% month over month in December.

The German Economy Ministry, which releases the data, said the correction was mainly due to the strong December numbers and that the improving trend remains intact. Orders still rose 1.6% in the three months to January, the third consecutive month with a positive trend rate and judging by confidence data, growth is picking up again and increasingly boosted by consumption trends, rather than exports.

So the weak orders numbers and the disappointing manufacturing PMI are as much a sign of a rebalancing of the German economy and a broader based recovery, as of the localized weak spot. The trend rate also shows a very encouraging 2.4% rise in orders for capital goods in the three months to January.

French unemployment picked up in Q4 2014. Official data show overall unemployment rising to 10.4% from 10.3% in the previous quarter. Mainland unemployment rose to 10.0% from 9.9%. France continues to underperform not so much due to an enforced austerity budget, as the government likes to say, but structural rigidities, which have undermined the country’s competitiveness and which no amount of deficit spending will remedy.

The EUR/USD made a fresh trend low as momentum turned negative. The MACD (moving average convergence divergence) index generated a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread.

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Source:: Euro Hits Fresh 11 Year Lows Ahead of ECB Announcement on QE

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