Talking Points
- Euro-Zone GDP growth climbed to 2.1% year/year in the second quarter, up from 1.9%.
- The quarter/quarter increase was 0.6%, up from a downwardly revised 0.5% in the previous quarter.
- EUR/USD was marginally weaker after the data.
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EUR/USD was modestly lower in the FX markets Tuesday after data showed that Euro-Zone GDP growth climbed to 2.1% year/year in the second quarter of 2017, up from the previous quarter’s 1.9%. The figure was in line with economists’ forecasts and there was little market response to the data.
Quarter/quarter, Euro-Zone GDP expanded by 0.6%, up from a revised 0.5% in the first quarter and again in line with expectations. Taken together, the figures suggest that the Euro-Zone is still growing robustly and are unlikely to alter expectations that the European Central Bank will soon begin to consider tightening its monetary policy.
Against this background, EUR/USD eased modestly after the numbers but this year’s strong upward trend still shows no sign of faltering, even though momentum indicators suggest that it now overbought. IG client sentiment data suggest the outlook for EUR/USD remains bullish.
Chart: EUR/USD Daily Timeframe (2017 to Date)
Earlier, the final IHS Markit Euro-Zone manufacturing PMI showed that Euro-Zone manufacturing growth slowed slightly at the start of the third quarter. The PMI came in at 56.6 in July, down from both the flash estimate of 56.8 and June’s final 57.4. However, growth was recorded across all nations covered, led by Austria, the Netherlands and Germany. Input price pressures abated further
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at martin.essex@ig.com
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