When is the German industrial production and how could it affect EUR/USD?

Overview

Eurozone's manufacturing powerhouse Germany will publish industrial production figures for the month of July at 06:00 GMT.

The data is expected to show the factory activity expanded at a seasonally adjusted rate of 0.3% month-on-month in July, having dropped 1.5% in the preceding month.

Lead indicators point to weakness

German factory orders or contracts for goods ‘Made in Germany’ fell 2.7% month-on-month and 5.6% year-on-year in July.

Meanwhile, the headline IHS Markit/BME Germany Manufacturing PMI had dropped to a seven-year low of 43.2 in July, mainly due to the steep drop in new export orders since 2009.

Put simply, the industrial production seems to have taken a big hit in July.

Impact on EUR/USD

A drop in the German industrial production will likely exacerbate recession fears, possibly triggering a sell-off in the common currency. The EUR/USD pair is already on the defensive, having created a Doji candle on Thursday.

The EUR may pick up a strong bid if the German data blow past expectations. The EUR/USD pair, however, needs to climb the Doji candle's high of 1.1085 to revive the bullish outlook put forward by a bullish candlestick pattern created earlier this week.

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.