German Industrial Orders Surprise with April Gain Driven by Domestic Demand

Economic

Summary:

Germany’s industrial orders rose 0.6% in April 2025, defying expectations of a 1.0% drop, as robust domestic demand offset weakening foreign orders...

Resilient Demand at Home Counters Global Weakness

According to fresh data from Germany’s federal statistics office, industrial orders increased by 0.6% month-over-month in April, defying market forecasts that predicted a 1.0% contraction. This unexpected rise, driven primarily by a 2.2% surge in domestic orders, highlights Germany’s internal economic stability even as external demand wavers.

Foreign orders, on the other hand, declined by 0.3% overall. This was split between a modest 0.5% rise in eurozone demand and a sharper 0.9% fall in orders from outside the bloc. These figures reinforce the narrative that global trade uncertainties—ranging from tariff disputes to geopolitical tensions—are still weighing on German exporters.

Short-Term Momentum Remains Positive

The less volatile three-month comparison from February to April showed a 0.5% increase in new orders relative to the previous three-month period. While this figure suggests modest growth momentum, it also indicates a fragile recovery, dependent more on domestic resilience than on sustained international demand.

Moreover, the March data was revised downward slightly from a 3.6% to a 3.4% gain, but the trend still indicates a rebound after the industrial sector’s earlier stagnation. This back-to-back monthly growth provides tentative optimism for the manufacturing-heavy economy, especially as it navigates structural transformations toward greener production, as highlighted by CO₂-reduced steel production in recent industrial headlines.

Broader Outlook and Implications

While the April data offers a welcome surprise, the broader picture remains mixed. Germany continues to face challenges such as high energy costs, slowing Chinese demand, and evolving supply chain strategies in response to shifting global trade dynamics. However, the strength of domestic consumption and public investment appears to be a stabilizing force.

For policymakers and the European Central Bank, these figures may complicate efforts to balance industrial policy with monetary decisions. The modest recovery in industrial orders, if sustained, could alleviate some recessionary fears, but reliance on domestic demand alone may not be sufficient for long-term industrial revival without stronger external tailwinds.

April’s industrial order data underscores the duality of Germany’s current economic condition—solid internal demand contrasted against weakening international trade flows. While the resilience at home is encouraging, the durability of this momentum will hinge on improvements in the global economic environment and successful structural adaptations within Germany’s manufacturing sector.

Source: Reuters

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Glendon

Economic

Commodity

Gold prices held steady on Thursday as investors awaited U.S. non-farm payrolls data due on Friday to assess the Federal Reserve's interest rate path, while global trade tensions continued to simmer.

Spot goldwas steady at $3,373.69 an ounce, as of 0843 GMT. U.S. gold futureswere down 0.1% to $3,397.20.

"I would say that the path of least resistance remains to the upside, despite today's sort of flat mode for gold trading. But I think this is more due to traders being in wait-and-see mode ahead of non-farm payrolls," said Ricardo Evangelista, senior analyst at brokerage firm ActivTrades.

Wednesday's ADP National Employment Report revealed U.S. private payrolls increased far less than expected in May. The more comprehensive non-farm payrolls report on Friday is expected to show that non-farm payrolls increased by 130,000 jobs in May after advancing by 177,000 in April, according to a Reuters survey of economists.

U.S. President Donald Trump on Wednesday called for Fed Chair Jerome Powell to lower interest rates.

"I think that a weakening in the US labor market will increase bets on a dovish Fed, so on the Fed cutting interest rates, (which) would be positive for gold," Evangelista added.

Gold, a safe-haven asset during times of political and economic uncertainty, tends to thrive in a low-interest-rate environment.

Trump described China's Xi Jinping as "tough" and "extremely hard to make a deal with" in a social media post, dampening hopes for a swift end to trade tensions. Meanwhile, his doubling of tariffs on steel and aluminium imports took effect on Wednesday.

"We stick to our price targets of USD 3,350 and USD 3,500 in 3 and 12 months time, reflecting first and foremost continued central bank buying as well as sound demand from safe-haven seekers," said Carsten Menke, analyst at Julius Baer.

Elsewhere, spot silverfell 0.6% to $34.74 an ounce, but hit its highest level since October 2012. Platinumrose 3.6% to $1,123.15, its highest level since April 2023, and palladiumwas up 1.7% at $1,017.37.

Source: TradingView

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Gerik

Economic

Inflation Metrics Distorted by Data Entry Mistake

In a development that further strains public confidence in the UK's statistical reporting, the ONS revealed that April’s official consumer inflation rate was overstated by 0.1 percentage points due to incorrect Vehicle Excise Duty data. This technical error originated from external government data which exaggerated the number of cars subjected to first-year tax rates, thereby artificially inflating price indices.

While the official Consumer Price Index (CPI) for April was reported at 3.5%—a notable rise from March’s 2.6%—the actual figure should have been 3.4%, according to today’s correction. This discrepancy also extended to the CPIH, which includes housing costs, and the Retail Price Index (RPI), which affects payouts on index-linked government bonds (gilts).

ONS Under Fire Amid Broader Data Scrutiny

This incident compounds existing concerns about the reliability of the ONS’s data. The agency is already facing criticism for erratic labor market reports, prompting the UK government in April to launch an independent review of the statistical agency’s operations and data integrity. This latest miscalculation—albeit small in absolute terms—has symbolic weight, as it highlights procedural lapses in quality control over externally sourced datasets.

The ONS has stated that it will not revise the previously published inflation figures despite the acknowledged error. However, it confirmed that data corrections have been applied starting from the May series, thereby ensuring future accuracy. A comprehensive review of quality assurance protocols is now underway.

Financial Market and Policy Implications

Though a 10 basis point difference may seem modest, it carries meaningful implications in financial markets and monetary policy. The Retail Price Index (RPI), which was also overstated, influences interest payments on index-linked gilts. Misreported inflation could affect investor confidence in UK government securities, especially in an environment of tight fiscal conditions and persistent scrutiny of inflation dynamics.

Additionally, the Bank of England may need to consider this error when interpreting recent inflation trends. Given that inflation metrics guide interest rate decisions, even small inaccuracies risk altering the perception of price stability or overheating.

The inflation misstatement, while quantitatively minor, adds to the ONS’s reputational challenges at a critical time. With inflation still a central issue for British households and policymakers alike, confidence in the precision and transparency of official economic data is essential. The correction emphasizes the need for robust verification systems—particularly when third-party data is involved—and highlights the broader risks of governance lapses in public economic reporting.

Source: Reuters

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Gerik

Commodity

China–U.S. Trade War

Strategic Resource Diplomacy Meets Trade Tensions

As the fifth round of U.S.-Japan tariff negotiations commences, Japan plans to put rare earth cooperation at the forefront of its agenda. According to the Nikkei, Tokyo aims to propose a strategic partnership with Washington to secure rare earth supplies—critical materials for electronics, defense, and green technologies—amid rising concerns over Chinese export controls. This proposal reflects growing anxiety in Tokyo and Washington about supply chain vulnerability in the face of Beijing’s geopolitical leverage over critical minerals.

Rare earths, though not scarce, are predominantly mined and processed in China, which gives the country a dominant role in the global market. By aligning with the U.S., Japan hopes to diversify sourcing and reduce dependency, particularly after China’s recent export curbs on gallium and germanium rattled supply chains across high-tech sectors.

Tariff Flexibility from Washington?

At the same time, Japan is pushing for relief from steep reciprocal tariffs imposed under Trump’s ongoing trade reset. While a universal 10% tariff remains in place on Japanese exports to the U.S., an additional 14%—part of a broader 24% package—has been suspended until July to allow time for negotiation. Reports from Jiji Press suggest the U.S. has shown signs of flexibility in reducing or lifting the suspended portion, providing some hope for Japanese exporters.

Chief negotiator Ryosei Akazawa is currently in Washington to lead the Japanese delegation. His talks with U.S. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick are critical, especially as Tokyo continues to protest the 25% levy on Japanese-made vehicles—an industry that remains the cornerstone of Japan’s economy.

Auto Industry at the Center of Japan’s Concerns

While rare earths signal long-term strategic alignment, the more immediate concern for Japan is the preservation of its automotive exports. The 25% tariff on Japanese vehicles, though temporarily paused, poses a significant threat to one of Japan’s largest economic sectors. Japanese officials argue that such tariffs are not only economically damaging but also run counter to the spirit of alliance and shared values between the two nations.

Japan’s auto sector has already faced headwinds from global EV competition, currency volatility, and supply chain restructuring. The additional tariffs risk further complicating their U.S. market access, just as automakers are ramping up investments in battery-electric models for American consumers.

Outlook and Implications

The convergence of resource security and tariff negotiations signals a new phase in U.S.-Japan economic diplomacy, where shared geopolitical interests—particularly regarding China—may help break the impasse. If Japan can secure concessions on tariffs in exchange for rare earth supply cooperation, both nations stand to benefit strategically: the U.S. would reduce its dependence on Chinese critical minerals, while Japan would secure market access for its vehicles and manufactured goods.

However, with the Trump administration pushing for aggressive trade realignment and tighter control over industrial inputs, any outcome will hinge on a delicate balancing act between domestic economic priorities and international strategic alliances.

Source: Reuters

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Gerik

Economic

Unpredictable Trade Shocks Disrupt Policy Tools

In an interview with the Financial Times, Gita Gopinath emphasized that emerging markets now face greater difficulty than during the pandemic because of the “differential effects” caused by trade wars. While COVID-19 was a global demand shock that could be countered with monetary easing and stimulus, trade tensions are creating fragmented, asymmetric shocks across developing economies. The fallout from tariffs is not only unpredictable but also prolonged, affecting inflation, investment sentiment, exchange rate stability, and export competitiveness differently across regions.

Emerging market central banks, which often rely on flexible monetary tools to counter external volatility, are now confronted with constraints. Aggressive easing could risk capital outflows, currency depreciation, and inflationary pressure—particularly if their economies are heavily reliant on exports or foreign direct investment from the U.S. or China.

Greater Complexity, Less Room for Maneuver

Gopinath’s remarks highlight how today’s geopolitical trade landscape complicates macroeconomic management for emerging economies. During COVID-19, the synchronized global downturn gave central banks across both advanced and developing economies a shared rationale to slash interest rates and inject liquidity. In contrast, the tariff-driven trade war is asynchronous and more selective, requiring nuanced responses to sector-specific and bilateral disruptions.

Many emerging markets are now facing inflation that stems not from overheating domestic demand, but from supply-side disruptions and higher import costs—particularly for intermediate goods, food, and energy. This limits the effectiveness of traditional monetary easing, while also making inflation targeting more fragile in the face of volatile global prices.

Implications for Global Financial Stability

The IMF's warning underlines broader systemic concerns. As Gopinath notes, central banks in the developing world must now balance between stabilizing their economies and defending their currencies, all while dealing with capital flow volatility triggered by policy swings in major economies. For countries with high external debt or commodity-dependence, the risks are amplified.

If left unmitigated, these pressures could deepen inequality across the global South, stall investment, and lead to divergent recoveries. The IMF may need to ramp up tailored financial support or policy coordination to help stabilize vulnerable economies caught in the crossfire of the U.S.-China tariff escalation.

The IMF’s assessment serves as a stark reminder that while pandemics shock economies through health and supply channels, trade wars erode the very foundation of international economic integration. For central banks in emerging markets, the stakes are now higher, the policy space narrower, and the consequences more unequal. As the trade war unfolds, the resilience of developing economies will depend not just on monetary tools, but also on targeted fiscal support, structural reforms, and global cooperation.

Source: Reuters

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Gerik

Economic

Expanded Travel Ban Follows Boulder Attack and Border Concerns

In a move echoing his 2017 "Muslim ban," President Trump announced a new travel ban affecting nationals from 12 countries, including Afghanistan, Iran, Libya, Somalia, and Yemen. The proclamation came shortly after a terror attack in Boulder, Colorado, which Trump used to reinforce concerns about inadequate visa screening and overstays. Although the suspect in the attack—a man from Egypt who overstayed a visa—was not from one of the banned countries, Trump cited the incident as justification for broader entry restrictions.

The administration emphasized the need to protect the U.S. from what it called “unvetted foreign nationals,” with Trump declaring in a video, “We don’t want them.” While those with existing visas, permanent residents, and individuals traveling for events like the Olympics are exempt, the proclamation signals a return to Trump's earlier restrictive immigration policies.

Harvard University Targeted in Separate Proclamation

In a surprising extension of the travel policy, Trump also issued a separate order targeting foreign exchange students at Harvard University. The administration accused the university of lax enforcement of disciplinary conduct, especially among foreign students, and of withholding critical records from federal authorities. The proclamation suspends new visas for Harvard’s exchange programs, escalating Trump’s campaign against perceived liberal academic institutions.

Trump specifically cited “antisemitic conduct” and “failure to discipline violations” as justification, although the university has not publicly responded to the accusations.

Legal and Political Implications

The expanded travel ban is expected to face immediate legal challenges, just as Trump’s original executive order did in 2017. That policy—widely referred to as a “Muslim ban”—sparked global outrage and was ultimately upheld by the U.S. Supreme Court in 2018 after multiple revisions. Trump’s latest version aims to preempt legal criticism by including non-Muslim-majority countries like Haiti and Venezuela and by outlining specific exemptions.

Legal experts suggest the courts will again be called to determine whether the ban violates constitutional protections or immigration statutes. Nonetheless, Trump appears undeterred, framing his actions as part of a broader national security campaign and asserting broad executive authority over border control.

Broader Immigration Agenda and Election Pledge Fulfillment

This proclamation marks another cornerstone of Trump’s revived immigration strategy in his second term. Since returning to office, he has declared a national emergency at the southern border, deployed military resources, increased deportations, and attempted to challenge birthright citizenship—moves that have drawn both legal pushback and praise from conservative voters.

Trump's use of executive orders to reinstate his signature travel ban fulfills a major 2024 campaign promise. He had pledged not only to reinstate but also to expand the original ban, particularly warning about refugees from conflict zones such as Gaza. His administration has also employed trade tools—namely tariffs—to pressure Mexico and Canada to enforce stricter immigration controls on their own borders.

Trump’s reinstatement and expansion of the travel ban underscore a strategic pivot back to the combative immigration stance that defined his first presidency. With global tensions rising and migration again a politically charged issue, this latest move is likely to energize his base while provoking fierce opposition from immigrant advocacy groups, legal watchdogs, and civil liberties organizations. Whether the new ban will withstand judicial scrutiny remains to be seen, but its political impact is already being felt.

Source: Bloomberg

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Blue River

Forex

Technical Analysis

Economic

Despite weak US macroeconomic data, the EURUSD pair still struggles to break above the 1.1425 resistance level, indicating persistent seller pressure. EURUSD technical analysis points to waning upward momentum and an increased risk of a correction towards 1.1270.

The EURUSD pair is correcting despite persistent pressure on the US dollar from weak macroeconomic data. Find out more in our analysis for 5 June 2025.

EURUSD forecast: key trading points

●The ADP report showed the US private sector added only 37 thousand jobs in May

●The US ISM services PMI fell to 49.9 points in May

●The drop in ISM reflects a decline in business activity

●EURUSD forecast for 5 June 2025: 1.1270

Fundamental analysis

The EURUSD rate is showing a slight decline. Sellers continue to defend the key resistance level at 1.1425, holding back further upward attempts.

The US dollar came under pressure after disappointing macroeconomic figures. According to the ADP report, the private sector created just 37 thousand jobs in May, well below the forecast of 80 thousand, marking the weakest performance in two years.

Further downside came from the ISM services PMI, which fell to 49.9 in May, dipping below the 50 mark for the first time in a year, indicating contraction. This reading missed the 52.6 forecast and points to a sharp decline in new business amid rising resource costs.

EURUSD technical analysis

While the EURUSD rate maintains its upward trajectory, the failure to reach a new local high suggests weakening bullish momentum. Today's EURUSD forecast anticipates a potential breakout below the support level and a corrective move towards 1.1270. The Stochastic Oscillator signals a likely bearish turn, with its values rebounding from the resistance level, forming a downward reversal. A breakout below the lower boundary of the bullish channel will confirm the bearish scenario, with the price consolidating below 1.1355.