Forex News – Gains in euro capped after weak German industrial production data

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Euro briefly falls from an intra-day high of 1.2784 against the US dollar following German industrial production data which indicated a drop to 0.6 percent in November, more than the expected 0.5 percent decrease.  Previous data showed growth of 0.8 percent.

EURUSD fell within 10 minutes of the announcement to 1.2742 from the 1.2763 level before the news. After a rebound, the pair fell back down to 1.2746 by 12:30 GMT.

Germany’s factories produced fewer investment and consumer goods industrial output declined as orders declined before the end of the year.

Production of investment goods fell 1 percent in November and consumer goods production declined 0.7 percent, today’s report showed.

“The backlog of orders is coming to an end,” said Christian Schulz, an economist at Berenberg Bank in London. “However, the German economy is pretty robust and will recover quickly.”

There is some optimism that German economy could avoid a recession even as other euro zone economies grapple with the sovereign debt crisis which is hurting growth and the overall economic outlook. Germany’s unemployment is at a two-decade low and is helping keep  consumer sentiment high, while service industries expanded in December and business confidence unexpectedly rose for a second month.