Germany’s HCOB Manufacturing PMI for December was 47, slightly below the expected 47.7. This shows a continued decline in manufacturing, highlighting challenges in the sector. The Manufacturing PMI is an important economic indicator. A reading below 50 means the sector is contracting. Analysts will watch how this data impacts the euro and market sentiment in the future.

Focus on Economic Indicators

Attention is now on upcoming economic indicators and how they could affect monetary policy and the Eurozone market. This PMI result reflects ongoing issues in the German manufacturing industry. Supply chain disruptions and rising inflation are major factors affecting the sector. The market will closely monitor these trends to evaluate their effect on broader economic strategies and stability. Last month, German manufacturing data confirmed a slowdown, with the December PMI at 47. This figure is lower than the anticipated 47.7 and marks the fifth consecutive month of decline for the sector. It indicates a weakness in Germany’s industrial base as we enter the new year.

Impact on Currency and Equity Markets

This downturn is likely to exert downward pressure on the euro, especially against the US dollar. Recent figures from Destatis show that December 2025 inflation cooled to 2.1%, leaving little reason for the European Central Bank to adopt a hawkish stance. Traders might consider put options on EUR/USD or outright short positions, aiming for a drop below the 1.07 level in the coming weeks. For equity derivatives, this weakness could pose challenges for the German DAX index. After a strong finish in 2025, the index has already lost over 1.5% in early January 2026 in response to this and other slowing indicators. We suggest buying put options on the DAX or on major industrial companies as a smart hedge against further declines. The combination of shrinking manufacturing and slowing inflation raises the likelihood of a more dovish ECB. This scenario is usually favorable for fixed income investments, as the chances of future interest rate hikes decrease. Therefore, we are considering long positions in German Bund futures to capitalize on this potential policy change. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now