Euro trims gains as German Factory Orders miss expectations

The Euro experienced a brief surge on Thursday before easing back as German factory orders fell short of market expectations. The EUR/USD currency pair slipped below 1.1250 following its highs near 1.1270, yet it stays on course for its best weekly performance in three months. Earlier, German factory orders rose by 4.4% in September, a bounce from August's 10.1% decline, but still fell short of the anticipated 4.8% increase.

However, year-on-year, orders climbed 3.3%. The Euro benefitted from the sharp drop in oil prices after the US midterm elections. The price of a barrel of Brent Oil dropped around $20 over the past two days, nearing $93.00. This relief for Eurozone economies, which import oil, has prompted hopes of U.S. President Donald Trump reconsidering his involvement in the conflict.

Despite Trump's defense of the Iran intervention on Wednesday, Vice President JD Vance claimed on X that the war was a key factor in the Republican defeat, and Trump admitted it. Additionally, Eurozone preliminary data released on Wednesday indicated that consumer inflation surged to 4% year-on-year in October, which may force the European Central Bank to maintain its tightening monetary policy.

In contrast, US job data released also showed a stronger economic momentum, but it didn't boost the US Dollar. ADP Employment figures showed an 86K increase in net jobs in October, surpassing expectations of a 69K increase. The ISM Services Purchasing Managers Index (PMI) was slightly below expectations but still indicated solid activity.

The Factory orders released by the Deutsche Bundesbank include shipments, inventories, and new and unfilled orders. A rise in factory orders could signal a German economy expansion and potentially contribute to inflation. However, it only barely affects the total Eurozone GDP, which is positive (bullish) for the Euro and negative for a low reading.