EUR/USD has posted small gains in the Tuesday session. Currently, the pair is trading at 1.1724, up 0.16% on the day. On the release front, there are a host of events in both Europe and the U.S. In Germany, Retail Sales rebounded with a gain of 1.2%, edging above the estimate of 1.1%. French Preliminary CPI declined 0.1%, above the estimate of 0.3%. In the eurozone, CPI Flash Estimate edged up to 2.1%, above the forecast of 2.1%. Core CPI Flash Estimate gained 1.2%, above the forecast of 1.1%. Eurozone Preliminary Flash GDP dipped to 0.3%, shy of the estimate of 0.4%. In the U.S, we’ll get a look at consumer inflation and spending reports. As well, CB Consumer Confidence is expected to tick up to 126.5 points. On Wednesday, Germany, the eurozone and the U.S release manufacturing PMIs. As well, the Federal Reserve will release a rate statement.
The German consumer has been in a surly mood, with retail sales posting declines for most of 2018. After a 2.1% decline in May, there was a strong rebound in June, with a gain of 1.2%. In the eurozone, the inflation estimate for July ticked higher, but the GDP gain of 0.3% was a disappointment. The reading missed the estimate and marked the smallest gain since Q3 of 2016. The eurozone economy hit some headwinds in the first quarter, but second-quarter data has been better and the ECB remains on track to wind up its bond-purchase program at the end of the year. The massive stimulus program gets mixed marks, as the eurozone economy is in a growth stage, but inflation remains well below the ECB target of just below the 2 percent level.
The U.S economy continues to hum, and Advance GDP for Q2, the first of three GDP reports, posted a sparkling gain of 4.1%, just shy of the forecast of 4.2%. This was much stronger than the gain of 2.2% in Q1 and marked the strongest quarter of economic growth since 2014. President Trump took credit for the strong GDP report and claimed that “these numbers are very, very sustainable”. However, analysts are being more cautious in their forecasts, calling for growth in the third quarter of around 2.5 percent.
