HomeContributorsFundamental AnalysisEuro Unchanged As Eurozone Flash GDP Matches Estimate

Euro Unchanged As Eurozone Flash GDP Matches Estimate

EUR/USD is unchanged in the Wednesday session. Currently, the pair is trading at 1.1715, down 0.20% on the day. On the release front, euro zone Flash GDP edged up to 0.6% in the second quarter, matching the forecast. In the US, the focus will be on housing data, with the release of Building Permits and Housing Starts. Both indicators are expected to remain unchanged from their previous readings. As well, the FOMC will release the minutes of its July policy meeting. On Thursday, the euro zone releases Final CPI and the ECB publishes the minutes of its July meeting. In the US, the key events are unemployment claims and the Philly Fed Manufacturing Index.

The euro zone economy has now picked up speed over three straight quarters. In the second quarter, euro zone Flash GDP posted a gain of 0.6%, slightly stronger than the 0.5% reading in Q1. Much of the credit for improved growth in the euro zone must be given to Germany, the largest economy in the bloc and the star performer. Germany’s GDP expanded 0.6% in the second quarter. Consumer spending, a key driver of economic growth, continues to propel economic growth, and Germany has now posted 12 straight quarters of growth. Higher wages and increased government spending have also boosted the economy. The export sector remains strong, despite the stronger euro, as global demand for German products, especially automobiles, remains firm. Positive economic conditions in Germany have translated into a stronger euro zone economy, which has experienced higher growth and lower unemployment.

The euro has taken a pause in August, but the currency has posted impressive gains in recent months, with EUR/USD jumping 3.5% in July. The euro has received a boost from a stronger euro zone economy, as well as growing political risk in the United States, as the Trump administration has lurched from crisis to crisis, and hasn’t managed to pass a single major bill through Congress. The latest fiasco for Trump was the alt-right protest in Charlottesville, where one protester was killed by a suspected white supremacist. Trump initially refused to condemn white supremacists for the violence, and faced a strong backlash of criticism from both Democrat and Republican lawmakers. Trump finally came out with a statement on Monday which condemned hate groups, including white supremacists. However, the brash president followed up on Tuesday by again blaming both sides in Charlottesville, raising questions about Trump’s reluctance to unequivocally condemn hate group such as white supremacists.

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