EUR/USD – French and German GDP numbers above forecasts

on Aug 14, 2013

**, Wednesday 14 August:**

French Preliminary GDP q/q beat the market consensus for a marginal 0.1 percent progress with a solid reading of 0.5 percent, as against the Q1 decline of 0.2 percent. Year-on-year economic activity in France increased by 0.3 percent compared to the expected drop of 0.1 percent. Though the number for the prior quarter was lower on revision, down from a decrease of 0.4 percent to -0.5.

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German Preliminary GDP for Q2 y/y today reported a growth rate of 0.5 percent, well above analysts’ estimates for 0.2 percent and Q1’s decrease of 0.3 percent, revised down from -0.2.
Finnish GDP for Q2 y/y stayed unchanged after a drop of 0.7 percent in Q1, revised up from -0.8 percent.
Portuguese GDP for Q2 q/q is due out at 09.30 BST, with economists picking a mild decrease of 0.1 percent after the prior fall of 0.4 percent.

The Eurozone Flash GDP is scheduled at 10.00 BST. After the Eurozone Services PMI turned into positive territory for the first time in 2 years, analysts are expecting a modest 0.2 percent growth in Q2. The first quarter figure was revised down to a fall of 0.3 percent from -0.2 percent. Year-on-year pundits are forecasting the economic growth of the Euro area to remain in negative territory around 0.8 percent from the prior drop of 1.1 percent.


Yesterday’s jump in European Economic Expectations in the August ZEW survey has revealed that market experts are turning bullish on Europe as the debt crisis risks diminish. The Bank of America Merrill Lynch Fund Manager survey shows that 88 percent of portfolio managers believe Eurozone growth will strengthen over the next year, a sharp surge from July’s 44 percent reading. The confidence in a positive economic outlook is the highest in over 9 years as the Euro area periphery has stabilized and the core is growing at a sustainably solid level.

After falling as low as 1.3234 yesterday, the euro has been consolidating and in early European trading the EUR/USD is trading around 1.3266 or 0.02 percent up for the day.
Later today, the July US Producer Price Index is due out at 13.30 BST. Analysts forecast growth of 0.3 percent in the last month after the previous figure showed a solid 0.8 percent. The Core PPI is expected to match June’s rise of 0.2 percent.


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