EURUSD over 11700 as we await US GDP

EURUSD, H1                       

The first release on Q2 GDP is out later and could reveal a 3.0% (median consensus is  2.5%) headline for the quarter following a 1.4% pace in Q1. Consumption looks poised for stronger growth during the quarter and we expect a 3.0% clip, up from 1.1% in Q1 and inventories should help lift the headline after a $47.0 bln subtraction last quarter. This release will also include annual revisions to previously reported figures.  USD has weakened again this morning and the data at 12:30 GMT will be critical for closing positons this week.

EURUSD has regained and held 1.1700 this morning helped by positive Eurozone ESI economic confidence that unexpectedly improved to 111.2 in July from 111.1 in the previous month and a raft of positive German state inflation data. Two of the heavyweights among the German states, Bavaria and NRW reported an unexpected uptick in the annual rate of 0.2% points, while headline rates were broadly steady in the other states. The data points to an upside surprise in the German HICP rate, which was expected to remain steady at 1.5% y/y, but could nudge higher to 1.6% y/y. The Spanish HICP rate already nudged higher unexpectedly, while the French reading remained unchanged, so on balance this could also mean an uptick in the overall Eurozone number, out next week. Today’s data adds to pressure on the ECB to discuss tapering when the QE schedule for next year is being discussed in (as we now expect) September.


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Stuart Cowell

Senior Market Analyst


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