The Euro is supported by the German data and the recovery plan

By Peter Nurse

The euro has posted gains in the european session on Monday morning, helped by signs of economic recovery in Germany and by the hope of more stimulus for the region in the near future.

At 9: 50 am, the EUR/USD has gained 0.4% to 1,1294, while the EUR/GBP climbed 0.3% to 0,9032.

Orders to German factories increased 10.4% in may, demand has rebounded after the country has eased its restrictions to contain the spread of the coronavirus, which proves that the european economy begins to recover.

“After two months of devastating, the increase of today is the largest monthly increase ever recorded”, said the analysts of ING (AS:INGA) in a research note, although “even after the increase today, order books are lower to some 30% in the levels of the first quarter”.

“Today’s data on industrial orders provide two important messages : the lifting of the containment has led to bursts of activity in the shape of a V, but the return to pre-crisis levels will not be easy,” added the bank.

In this perspective, the market will be on the alert for any new signal on the stimulus funding, the region from the meeting of the finance ministers of the euro area this Thursday, before the summit on 17 and 18 July of the leaders of the region.

Germany, the economic power of Europe, will be very keen to obtain a consensus on the structure of the stimulus funds, since it now provides the rotating presidency of the european Union for six months.

The dollar index, which tracks the greenback against a basket of six other currencies, declined 0.5% and is heading towards a low of two weeks to 96,852. The GBP/USD rose 0.2% to 1,2504, while the USD/JPY gained 0.1% to 107,64.

The dollar was down on Monday as investors leaving the safe haven in a context of optimism regarding the activity data of the sector of the u.s. service for the month of June, expected later in the day.

Forecasts prepared by provide a reading of 50 for the purchasing managers index non-manufacturing Institute for Supply Management.

“The ISM non-manufacturing is going to be very interesting, especially after the ISM manufacturing index has exceeded 50,” said the analysts of the Danske Bank, in a research note. “However, we see a growing risk of seeing the gradual recovery in July and August will slow down due to the pandemic of sars coronavirus in large States such as California, Texas and Florida, which have led to blockages in the premises”.

The world health Organization has reported the highest number of cases over a period of 24 hours, the United States has registered more than 150,000 new cases during the long holiday weekend.

The AUD/USD pair has gained 0.6% to 0,6979, helped by the rising price of copper and other export products. The reserve Bank of Australia will meet on Tuesday for his meeting of the policy and should keep its key rate at 0.25%.

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