On May 8th, the German Federal Statistical Office reported on Thursday that industrial orders in Germany for March increased significantly beyond expectations, a trend that held even after excluding highly volatile large-scale orders. This marks the second consecutive month of growth following a substantial decline at the beginning of the year. After seasonal and calendar adjustments, industrial orders rose by 5.0% compared to the previous month, accelerating from the upwardly revised growth of 1.4% in February and far exceeding the market's anticipated 1.0% increase. Excluding large-scale orders, new orders increased by 5.1% month-on-month, reaching the highest level since February 2023. Data comparing the past three months, which is less volatile, showed that new orders in the first quarter fell by 4.1% compared to the previous quarter when including large orders; however, excluding them, orders grew by 1.6%.
Commerzbank analyst Jörg Krämer expressed surprise at such growth occurring in the first month following the outbreak of conflict involving Iran, but he cautioned that sentiment indicators suggest orders might react negatively to the current uncertainty and potentially decline in the second quarter. Krämer stated, "The war in the Middle East is having a negative impact, even if it were to end quickly."
In related news, European Central Bank Executive Board member Piero Cipollone indicated on the 6th that if the energy shock triggered by the Iran and Middle East conflict intensifies further, the ECB might need to adjust its policy interest rates. He warned that this represents the second major energy shock in four years, with the potential to push inflation above the ECB's 2% target. Speaking during a keynote address at the 2026 Sustainable Development Festival in Milan, Cipollone noted that after a hard-won period of price stability and robust growth, the Eurozone economy is once again facing severe challenges. Inflation had previously returned to target levels, real incomes had recovered from the last energy shock, and domestic demand within the Eurozone had partially offset the drag from US tariff increases and a surge in imports from a major Asian economy. However, the Middle East conflict is causing disruptions to energy flows, and the closure of the Strait of Hormuz is beginning to significantly impact global supply chains.
Key data to be watched today includes Germany's seasonally adjusted industrial production month-on-month for March, Germany's seasonally adjusted export figures month-on-month for March, the US seasonally adjusted non-farm payroll change for April, Canada's employment change for April, the preliminary US University of Michigan Consumer Sentiment Index for May, and the final US wholesale inventories month-on-month for March.
**USD Index** The US Dollar Index edged higher yesterday with a slight daily gain, currently trading around 98.20. Besides short-covering providing some support, renewed risk aversion stemming from Middle East tensions spurred safe-haven demand for the US dollar, also contributing to its strength. Additionally, hawkish remarks from Federal Reserve officials and positive US economic data released during the session offered further support. Attention today is on resistance near 98.80, with support likely around 97.80.
**EUR/USD** The Euro declined slightly against the US Dollar yesterday, currently trading around 1.1730. Apart from profit-taking exerting some downward pressure, the rebound in the US Dollar Index—supported by renewed risk aversion, positive economic data, and hawkish Fed commentary—was the primary factor weighing on the Euro. Nonetheless, positive economic data from the Eurozone released during the session limited the pair's losses. Focus today is on resistance near 1.1800, with support seen around 1.1650.
**GBP/USD** The British Pound softened against the US Dollar yesterday, currently trading around 1.3550. In addition to profit-taking applying some pressure, the rebound in the US Dollar Index, fueled by safe-haven demand and robust economic data, was a key factor behind the Pound's decline. Furthermore, concerns regarding political uncertainty in the UK also contributed to the currency's weakness. Market participants will watch resistance near 1.3650 today, with support anticipated around 1.3450.