(07 October 2019 ) DAILY MARKET BRIEF 1：Weak German Factory Orders

Economic data in Germany continues to deteriorate. Factory orders in Germany declined by -0.6% m/m in August, below the expectations for a -0.3%. The annual rate was nothing had much better rate falling to -6.7% from revised lower by -5.0% in July. New orders in immediate goods provide a small rebound on the month but weakness in the capital and consumer goods pressured the headline. Perhaps the most concerning aspect of the read were 2.6% m/m plunge in domestic orders, especially in consumer goods. Economic weakness is not translating into worrying consumers. Household consumption in Germans as perfect of GDP has declined since 1980 however still is 52%. Reality is that German manufacturing remains in recession in Q3 and news that the German consumer is showing signs of weakness is concerning. The German GDP growth is likely to contract further. Executive Board of the ECB is still showing significant divisions. However, as the data from Europe’s engine of economic growth stalls watch for supporters of loose monetary policy to increase (16 doves – 6 hawks estimates). Christine Lagarde's previous policy statements have been similar to Draghi indicated more expansionary policy action is on the way. We would remain seller of Euro and view bounces in EURUSD as an opportunity to reload shorts.

By Peter Rosenstreich