When is the German Industrial Production and how could it affect EUR/USD?

Overview

Eurozone's manufacturing powerhouse Germany is set to publish Industrial Production figures for October at 07:00 GMT. 

The data is expected to show the factory activity expanded at a seasonally adjusted rate of 0.1% month-on-month in October, having dropped by 0.6% in the preceding month. 

Meanwhile, the annualized number is forecasted to print at -2.8% compared to September's -4.3%. 

Weak data likely

Industrial Production is unlikely to have registered growth in October, according to lead indicators. 

Factory orders dropped 0.4% month-on-month in October compared to a revised 1.5% increase in September and missing expectations for a 0.3% rise.

Further, IHS Markit’s Purchasing Managers’ Index (PMI) for manufacturing had remained well below 50 in October, signaling contraction for the ninth straight month. 

Impact on EUR/USD

EUR/USD closed above the Nov. 21 high of 1.1097 on Thursday, invalidating the bearish lower highs setup. Put simply, the path of least resistance is to the higher side. 

The 14-day relative strength index is also reporting bullish conditions with an above-50 print. 

More importantly, the pair managed to print a bullish close on Thursday despite the dismal German Factory Orders data. Put simply, markets seem to have done pricing in the German slowdown. 

The pair, therefore, may not see big losses even if the Industrial  Production prints below estimates. On the flip side, upbeat data could end up bolstering the bullish technical setup. 

About German Industrial Production

The Industrial Production released by the Statistisches Bundesamt Deutschland measures outputs of the German factories and mines. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. A high reading is seen as positive (or bullish) for the EUR, whereas a low reading is seen as negative (or bearish).