In August, there was a 3.9% rise in German factory orders.

The German factory orders rose by 3.9% in August, following an 11.3% decline in July. Economists had predicted a 1.8% increase for August. According to Destatis, the manufacture of computer, electronic, and optical products surged by 37.9% in August, attributed to the production of electronic components. Additionally, there were notable increases in orders for electrical equipment (+8.7%) and Pharmaceuticals (+4.0%), but a decline of 0.7% was seen in the auto industry. Overseas orders grew by 3.9%, while domestic orders saw a 4.0% rise. Compared with the previous three months, orders increased by 4.9% from June to August 2023, but there was a 4.2% decrease compared to August 2022. Although the German manufacturing sector accounts for less than 20% of the economy, the rise in new orders may provide relief after recent weak economic indicators.

The EUR/USD reacted to the German factory orders, initially rising to a high of $1.05508 before falling to a pre-stat low of $1.05352. Post the German factory orders report, the EUR/USD dropped to a low of $1.05341 before rising to $1.05402. On the following morning, the EUR/USD was down 0.08% at $1.05382.

The next focus will be on the US Jobs Report. The report is anticipated to impact investor expectations on a potential December Fed rate hike. Economists predict that average hourly earnings will increase by 0.3% in September, and nonfarm payrolls are expected to rise by 170k. There is also an anticipation for a decrease in the US unemployment rate from 3.8% to 3.7%. Should there be an increase in wage growth and tighter labor market conditions, this would support a more aggressive Fed rate path. Additionally, it will be important to consider the reaction of FOMC members, with FOMC voting member Christopher Waller scheduled to speak.