FOREX Watch: Euro receives little support on positive data
The euro traded flat in Wednesday’s North American session after incurring heavy losses on the European trade floor. The euro failed to generate a bid following strong data out of Germany, the currency zone’s chief economic powerhouse. The single currency declined more than 0.4 percent versus the British pound and failed to make any progress against the US dollar, signalling broader macroeconomic forces are at play.
Germany’s torrid pace of upbeat performance measures continued Wednesday. Gross domestic product, the value of all the goods and services produced in the economy, advanced 0.9 percent in the second quarter, beating growth estimates by three times. The rebound in Q2 comes after a woeful first quarter saw the German economy contract by 1.9 percent. France, the Eurozone’s second largest member, also escaped recession by beating second quarter GDP forecasts. French GDP advanced 0.3 percent following a decline of 0.4 percent the previous quarter.
The euro advanced to a high of 0.8595 against the British pound following European growth data, but later fell beneath key supports after the UK released monthly unemployment figures. The July Claimant Count Change beat expectations for the second straight month with a reading of -29.2K for July, compared to -29.4K the previous month. UK employment figures have received greater attention following a decision by Bank of England Governor Mark Carney to tie interest rates to the unemployment rate, vowing to keep the cost of money at record lows until unemployment reaches 7 percent. The EURGBP would later consolidate at 0.8549 in the North American session.
The EURUSD was left to consolidate Wednesday, barely moving from its 1.3260 open. The markets will await Thursday’s Consumer Price Index, where it’s expected consumer inflation will reach 2 percent, a critical target for the US Federal Reserve. A reading that meets or exceeds the Bloomberg forecast of 2 percent will likely expose EURUSD to new supports south of the 1.31 handle.
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