EUR flows: German orders and French output data EUR supportive, but...
EUR firm in early trade after better German and French data, but underlying picture suggests downside risks on the crosses
German factory orders have come in stronger than expected in October, rising 1.5% m/m. This follows on from the strong 2.0% rise in September and stabilises the underlying trend after a couple of weaker months in July and August. French production and trade data are also slightly better than expected this morning, and EUR/USD has edged up this morning helped by these data releases. However, EUR/USD remains fairly stable in the mid-1.16s and the EUR has slipped a little on the crosses overnight against the JPY and AUD, both of which look undervalued relative to yield spread moves in the last 6 months. Todays data should help stabilise the EUR on the crosses, but we still see downside risks medium term.
