EUR/USD Exchange Rate Muted as French GDP Misses
The Euro to US Dollar (EUR/USD) exchange rate is on the defensive this morning as markets reflect on some weaker-than-expected growth in France during the last quarter.
At the time of writing the EUR/USD exchange rate is edging slightly lower, leading the pairing to strike a new one-week low.
Euro (EUR) Exchange Rate Softens as French Growth Weakened by Strikes
The Euro (EUR) is struggling to find its feet against the US Dollar (USD) and the majority of its other peers today following some disappointing French GDP figures.
According to data published by France’s statistics body, INSEE, France’s economy expanded 0.2% in the second quarter, missing expectations of 0.3%, while first quarter growth was revised down from 0.3% to 0.2%, weakening the appeal of the Euro.
The Q2 growth number for the second quarter was disappointing in France. It was just 0,158% (non annualized) which is rounded at 0,2%. It’s the same figure than in Q1 (0,153%).
— Philippe Waechter (@phil_waechter) July 27, 2018
The slowdown in Europe’s second largest economy was partly attributed to a wave of strikes carried out by French transport workers in the spring, with French rail workers walking out for as many as 26 days between April and June.
Analysts at INSEE said:
‘In services, the slowdown was notably driven by the downturn in transport expenses (−3.2% after +1.0%), mainly in rail transport as a result of strikes.’
With no other released scheduled for the day it’s likely the lacklustre GDP figures could continue to drag on the EUR exchange rate throughout the remainder of the session.
US Dollar (USD) Exchange Rate Steady as Markets Await Bumper US GDP Figures
Meanwhile the US Dollar (USD) exchange rate is in a holding pattern this morning as markets brace for the release of America’s own GDP figures.
The preliminary estimate of US GDP in the second quarter is currently forecast to show the US economy expanded by an impressive 4%, up from 2% at the start of the year.
Q2 #GDP growth is expected to be the strongest reading in years. The median Bloomberg-surveyed economist forecast for GDP growth is 4.0%, which, if realized, would be the largest quarterly increase since 5.2% growth in the 3rd quarter of 2014. (via LPL) pic.twitter.com/giQt4UOwtv
— Taylor-Swift Yield Spread (@TayTayLLP) July 25, 2018
This will be the first reading expected in which Donald Trump’s tax cuts are expected to have an impact, so a jump in growth is likely to be held up as a major success story by the president.
However any gains in the US Dollar could be potentially capped as analysts suggest the headline figures may be misleading, with some temporary factors such as a surge in exports ahead of the implementation of trade tariffs likely to inflate the reading.
EUR/USD Exchange Rate Forecast: Will Robust German Inflation Bolster the Euro?
Looking past the US GDP figures to next week’s session, the Euro US Dollar (EUR/USD) exchange rate could rally in the first half of the week as analysts forecast German inflation will have remained at a healthy 2.1% in July.
Further bolstering the Euro next week may be the release of the Eurozone’s GDP reading, with the bloc’s growth expected to remain steady despite the dip in French growth.
Meanwhile with the Federal Reserve unlikely to deliver any policy changes at next week’s policy meeting, USD investors will likely be focused on the latest US jobs data, with an expected fall in unemployment potentially turbo charging the US Dollar.