EUR/USD has edged lower on in the Tuesday session. Currently, the pair is trading at 1.1756, down 0.31% on the day. On the release front, there is just one euro zone indicator. German Preliminary GDP in the second quarter edged lower to 0.6%, missing the forecast of 0.7%. In the US, the key releases are Core Retail Sales and Retail Sales, which are expected to come in at 0.3% and 0.4% respectively. US Empire State Manufacturing Index is expected to improve to 10.1 points. On Wednesday, the euro zone releases Flash GDP. In the US, we’ll get a look at Building Permits and Housing Starts. As well, the FOMC releases its minutes from the July FOMC meeting.
It’s been a quiet August for the euro, but the currency has pushed upwards 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, with the Trump administration failing to pass a new healthcare bill through Congress. The latest fiasco for Trump is 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. Meanwhile, far away in the Korean peninsula, tensions between North Korea and the US have abated, after some serious saber-rattling which pushed global stock markets lower last week. European markets have started the week with gains, as the markets are hopeful that a diplomatic solution to the crisis will be found.
Germany’s economy has looked strong in 2017, and 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 has also boosted the economy. The export sector remains strong, despite the stronger euro, as global demand for German products, especially cars, remains firm. Positive economic conditions in Germany have translated into a stronger euro zone economy, which has experienced higher growth and lower unemployment.
