EUR/USD rises as German GDP beats forecast

Kenny Fisher MarketPulse

The euro is up for a third straight day on Wednesday. In the European session, EUR/USD is trading at 1.0839 at the time of writing, up 0.20% on the day.

Germany’s GDP for the third quarter surprised on the upside with a modest 0.2% gain. This was above the -0.1% reading in the second quarter and the market estimate of -0.1%. The German economy managed to avoid a technical recession, which is defined as two consecutive quarters of negative growth.

On a yearly basis, GDP fell by 0.2%, compared to zero growth in Q2 and a market estimate of -0.3%. Germany’s economy, the largest in the eurozone, remains in trouble and is weighing on the bloc. Eurozone GDP will be released later today and is expected to show a gain of 0.2% q/q and 0.8% y/y in Q3 vs. 0.2% q/q and 0.6% y/y in the second quarter.

German, eurozone inflation expected to accelerate

The markets will be keeping an eye on German inflation, which is expected to rise to 1.8% y/y in October, compared to 1.6% in September. This will be followed on Thursday with eurozone CPI, which is projected to rise from 1.9%, up from 1.8% previously. Core inflation is expected to creep lower to 2.6%, down from 2.7% in September and above the European Central Bank’s 2% target.

The German and eurozone inflation releases will be significant factors in the ECB’s rate plans. The central bank holds its final meeting of the year in December and a rate cut seems likely, although there is dissension among ECB Governing Council members as to the extent of the hike. If October’s inflation data is weaker than expected, we are likely to see growing calls for a jumbo 50-basis point cut at the December meeting.

EUR/USD technical

EUR/USD is testing resistance at 1.0840. Above, there is resistance at 1.0861.
1.0804 and 1.0783 are the next support levels.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

EUR/USD trims gains, hovers around 1.1900 post-US data

EUR/USD trades slightly on the back foot around the 1.1900 region in a context dominated by the resurgence of some buying interest around the US Dollar on turnaround Tuesday. Looking at the US docket, Retail Sales disappointed expectations in December, while the ADP 4-Week Average came in at 6.5K.

GBP/USD comes under pressure near 1.3680

The better tone in the Greenback hurts the risk-linked complex on Tuesday, prompting GBP/USD to set aside two consecutive days of gains and trade slightly on the defensive below the 1.3700 mark. Investors, in the meantime, keep their attention on key UK data due later in the week.

Gold loses some traction, still above $5,000

Gold faces some selling pressure on Tuesday, surrendering part of its recent two-day advance although managing to keep the trade above the $5,000 mark per troy ounce. The daily pullback in the precious metal comes in response to the modest rebound in the US Dollar, while declining US Treasury yields across the curve seem to limit the downside.

XRP holds $1.40 amid ETF inflows and stable derivatives market

Ripple trades under pressure, with immediate support at $1.40 holding at the time of writing on Tuesday. A recovery attempt from last week’s sell-off to $1.12 stalled at $1.54 on Friday, leading to limited price action between the current support and the resistance.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.