German manufacturing orders dropped -1.6% m/m in December. Expectations had been for orders to recover from the drop in November, but instead, the November number was revised up to -0.2% m/m from the -1.0% m/m reported initially and the December reading showed another sharp contraction mainly thanks to a slump in export orders. Three-month rates however still show a rise of 0.3% q/q in the last quarter of 2018, a marked improvement from the -1.0% q/q in Q3. The trend in capital goods orders in particular has been very strong, while intermediate goods as well as consumer goods orders declined in Q4 last year. So there is still some hope, but overall the data will add to concerns that the German economy is heading for a more protracted slowdown than officials care to admit.
The H1 and H4 downtrends have been running intact since Monday morning (February 4). The daily chart, following rejection of the key psychological level at 1.1500 last week (January 30 & 31) broke the 20-day Moving Average on last night’s close at 1.14036. The initial move is a Return to Trend move which we discuss in our Live Analysis webinars every Tuesday at 11:00 AM GMT. The 1.14036 entry would have T1 at 0.5 x ATR (1.13742), T2 1 x ATR (1.13448), and T3 2.5 x ATR at 1.12566. The initial stop loss would be placed above the turn in the market and the recent high at 1.1485.
Head Market Analyst
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