EUR/USD Exchange Rate Supported by German GDP Figures
The Euro to US Dollar (EUR/USD) exchange rate rebounded from a one-month low this morning as markets cheered the release of Germany’s latest GDP estimate.
At the time of writing EUR/USD exchange rate is trading at around $1.1005, having briefly fallen to $1.09 at the start of the session.
Euro (EUR) Stabilises as Germany Unexpectedly Returns to Growth
The Euro (EUR) has pulled itself out of the doldrums this morning as traders welcome a surprise uptick in German economic growth.
According to data published by its federal statistics agency, Destatis, Germany’s economy expanded by 0.1% in the third quarter, defying expectations it would instead shrink by 0.1%.
#German #GDP unexpectedly edged up 0.1% quarter-on-quarter in third quarter after drop of 0.2% q/q in Q2 (previously reported as 0.1% q/q drop). GDP up just 0.5% year-on-year in Q3. Growth mainly due to consumer & govt consumption https://t.co/QkjZsNhC0G via @financialtimes
— Howard Archer (@HowardArcherUK) November 14, 2019
Most importantly this prevented Germany from suffering two consecutive contractions, meaning the country avoided falling into a technical recession.
However the upside in the Euro appears capped this morning as analysts warn that the outlook for Germany’s economy still looks rocky.
Carsten Brzeski, Chief Economist at ING Germany, comments:
‘Recession or not, the German economy has fallen into a de facto stagnation, with quarterly GDP growth averaging a meagre 0.1% QoQ since the third quarter of last year.
‘There are very few signs of an imminent bottoming or recovery of the manufacturing sector since the summer of 2018. The sector is facing and will continue to face cyclical challenges.
‘Looking into 2020, it looks as if either the cyclical factors weighing on German industry will dissipate somewhat, with the entire economy rebounding, or the domestic part of the economy will also slow down.’
EUR investors will keep a close eye on German economic data in the coming months, which should offer greater sign of whether the country is set up for a rebound in 2020.
US Dollar (USD) Buoyed by Safe-Haven Demand
The US Dollar (USD) is firming this morning as a risk-off mood in markets continues to bolster demand for the safe-haven currency.
Ongoing US-China trade uncertainty and some underwhelming Chinese data are both weighing on market risk appetite this morning.
USD investors will now look to this afternoon’s PPI figures for further direction, with a uptick in producer prices in October poised to boost the US Dollar.
EUR/USD Exchange Rate Forecast: Rebound in Retail Sales to Strengthen the US Dollar?
Looking to the end of the week, the Euro US Dollar (EUR/USD) exchange rate may come under some pressure with the release of the latest US retail sales figures.
Economists forecast tomorrow’s data will show that sales growth rallied from -0.3% to 0.2% in October.
Robust consumer spending has been a key pillar of growth in the US economy so far this year so the rebound is likely to reflect well on the US Dollar.
Meanwhile, the Euro may struggle to find support on Friday as the Eurozone’s latest CPI release is expected to confirm that inflation slowed to just 0.7% in October.