Euro-Zone Q1’16 GDP Slightly Below Expectations, Greece Contracted
- Euro-Zone’s 1Q year-on-year GDP expanded 1.5% vs 1.6% expected
- Euro-Zone’s 1Q QoQ GDP expanded 0.5%, below the prior and expected 0.6%
- Greece contracting as QoQ GDP came at -0.40% vs -0.70% expected
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The Euro was little changed versus the other major currencies (at the time this report was written) after today’s Euro-Zone’s GDP figures came slightly below expectations. According to preliminary estimates by Eurostat, Euro-Zone’s Gross Domestic Product (GDP) grew a seasonally adjusted 0.5% in the Q1 of 2016, below the prior and expected figure of 0.6%. The year-on-year change in GDP was 1.5%, which was below the prior and expected 1.6% figure.
As was mentioned by DailyFX Chief Currency Strategist John Kicklighter, a lot of eyes were put on the GDP figures coming from Greece today, as the numbers might help understand the pressure for an agreement with creditors as the country struggles with debt and growth conditions.
Greek GDP came at -0.40% QoQ, which was not as bad as the expected -0.70%, but below the prior +0.10%. The year-on-year non-seasonally adjusted figure came at -1.30%, better than the -1.40% expected, but below the -0.70% prior figure.
Greece is trying to negotiate new funding, and is due to repay the IMF approximately €650 million in June and about €2.3 billion to the ECB on July 20.
Previously, the IMF and the European policy makers were not able to agree whether Greece would be able to meet the budget surplus target set under the original bailout agreement. Under the EU program, Greece is supposed to post a fiscal surplus before interest payments of 3.5% of GDP within two years.
Coming into today, the figures were seen as having broad implication, but lacking in “market moving” ability. Taking this into consideration, it seems the figures coming slightly below expectations were not a sufficient catalyst for directional conviction, and the Euro was little changed versus other major currencies.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 41.7% of FXCM’s traders are long the EUR/USD at the time of writing. The SSI is a contrarian indicator, implying further EUR/USD strength ahead.
You can find more info about the DailyFX SSI indicator here
EUR/USD 5-Minute Chart: May 13, 2016
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