H.G Markets:

The German economy was in the spotlight this Friday as investors carefully examined two important metrics: Producer Prices and Industrial Production.

After falling by 2.0% in December, German industrial production increased by 1.0% in January, above experts’ forecasts. Among the noteworthy developments are the building industry’s 2.7% rise and the constructive contributions of the food, chemical, and machinery maintenance sectors. However, a 7.6% drop in production was a significant setback for the automotive industry. Even after removing energy and building, industrial production increased by 1.1%. On the other hand, industrial production fell 1.5% over the course of three months, and by a significant 5.5% year over year. Producer Costs

After declining by 1.2% in December, German producer prices increased by 0.2% month over month in January, which was the first increase in five months. Producer prices decreased 4.4% on an annual basis, mostly due to a notable 11.7% drop in energy costs. The costs of capital and consumer items increased marginally despite the overall decrease.

Germany’s most recent economic data suggests that a recession might occur in the first quarter of 2024. Trade statistics indicated improving demand, but industrial orders offered different signs. These patterns are consistent with the GDP and inflation projections revised by the ECB Staff, pointing to a potential rate drop by June.

The EUR/USD currency pair responded to the German economic statistics in a variety of ways. The duo fell ahead of the release but then rose. But it changed as a result of the data, closing marginally lower in the end.

Investor opinion anticipating possible Fed rate reduction in H1 2024 may be influenced by the US Jobs Report, as well as the GDP and employment statistics for the Eurozone for Q4. In conclusion, investors should pay attention to central bank comments for clues into future monetary policy actions, in addition to the figures themselves.