The euro has edged higher in the Tuesday session, as EUR/USD is currently trading at 1.1250. In economic news, it’s a very busy day in the Eurozone. German Final GDP posted a gain of 0.6%, matching the forecast. There was positive news from the manufacturing sector, as German and Eurozone Manufacturing PMIs beat their estimates. German Ifo Business Climate rose to 114.6, easily beating the estimate of 113.1 points. In the US, today’s highlight is US New Home Sales, which is expected to drop to 611 thousand.
German numbers continue to impress, and a strong German economy has helped lift up the eurozone economy, which hasn’t looked this strong in years. German Final GDP for the first quarter remained at 0.6%, unchanged from the Preliminary GDP reading. The Ifo Business Climate report sparkled, climbing to 114.6, marking its highest level since 1991. As well, the manufacturing sector continues to expand, as German Manufacturing PMI improved to 59.4, its highest reading since February 2011. Exports and manufacturing propelled the economy in the first quarter, and these sectors should remain strong, so we can expect strong economic expansion in the second quarter as well. Eurozone numbers are likewise pointing to expansion, as reflected in the manufacturing sector. Eurozone Manufacturing PMI also impressed at 57.0, the ninth straight month that is has improved.
EU finance ministers met on Monday, and a key issue was debt relief for Greece. However, the ministers could not reach an agreement, and opted to try and hammer out an agreement at the June meeting. The uncertainty caused by the delay will only exacerbate concerns about the fragile Greek economy. Greece has undergone a severe austerity plan and understandably, the Greek government is reluctant to adopt further painful measures. However, Greece could be headed on a collision course with the EU, if the latter insists that the further reforms are needed. German Finance Minister Wolfgang Schaeuble praised the reforms implemented by Greece as “remarkable”, but insisted that Greece must take further steps before the EU provides further financial aid. Greek’s debt woes once resulted in the country almost leaving the eurozone, and if the EU holds up aid, the euro could lose ground.
