- France and Spain GDP Impresses – Euro US Dollar Bolstered
- German Inflation Figures Imminent – Annual Drop Expected, Month-on-Month Expected to remain Stable
- Republican Push to Gut Obamacare Fails – US Dollar Fluctuates on Political Uncertainty
- US GDP Forecast to Double – EUR USD Liable to Come Under Pressure
Update: German CPI Beats Expectations, EUR USD Climbs
German CPI data beat expectations this afternoon, increasing to 1.7% instead of falling to the predicted 1.5%, from previous 1.6%. The Euro US Dollar exchange rate was immediately bolstered as a result. Updated 13:15 28/07/2017
France and Spain GDP Impresses, German CPI on Horizon
The EUR/USD exchange rate remained close to its recent 2 ½ year highs today.
This morning it was announced that France’s economy grew by 0.5% in Q2 2017, matching expectations and continuing the previous trend; with France’s gross domestic product (GDP) actually having grown steadily by 0.5% on the quarter for the last 9 consecutive months.
The most significant boost for the GDP figure was a surge in exports, which jumped 3.1% in April to June whilst imports sat at the 0.2% mark.
Consumer spending also contributed, increasing to 0.3%, up from 0.1% in the first quarter.
Annually French GDP increased more than expected, printing at 1.8%, up from the 1.6% expected and indeed the 1.1% previous.
The Euro gained against the ‘Greenback’ in response, albeit minimally, as traders of the single currency braced for the German CPI.
US Dollar (USD) Fluctuates as Republican Effort to Repeal and Replace Obamacare Falls Short
The US Dollar was left putting in a mixed performance as US Senate Republicans failed to garner enough support to dismantle Obamacare in the early hours this morning as senators John McCain, Susan Collins and Lisa Murkowski voted to reject the ‘skinny repeal’ bill.
The repeated pushback on US legislative changes has begun to weigh on investor sentiment towards the US Dollar, primarily as previous hopes for rapid change on things like taxes, healthcare and infrastructure spending have diminished in the wake of such slow progress.
Mitch McConnell, Senate Republican leader, expressed disappointment, saying: ‘The American people are going to regret that we couldn’t find a better way forward’.
EUR USD Forecast: German Inflation Figures and US GDP Imminent
Whilst the French and Spanish GDP figures were positive, forex markets are currently waiting with baited breath for the release of today’s German inflation data, as this will be one of the more significant deciders of ‘inflationary momentum’ to be considered by the European Central Bank (ECB) when they vote on future interest rate policy.
Whilst the month-on-month German CPI figure is forecast to remain stable at 0.2% growth, the year-on-year figure is forecast to present a very slight decrease from 1.6% to 1.5%.
A significant negative deviation from this figure will likely push the Euro onto the back-foot as the trading week ends, whilst a positive surprise may well be enough to stave off today’s US GDP figure.
The annualised US gross domestic product Q2 figure is currently forecast to almost double from 1.4% to 2.7%; growth twice as fast as first three months of 2017. This would be very significant should it materialise, as it would put the US economy back on track to top an average of 2% growth in 2017, thus causing a surge in demand for the US Dollar as rate hike sentiment would likely abound.
Current Interbank EUR GBP Exchange Rates
At the time of writing, the Euro to US Dollar (EUR USD) exchange rate was trading at 1.1705 and the US Dollar to Euro (USD EUR) exchange rate was trading at 0.8540.