German Quarterly GDP Falls at The Fastest Rate in 50 Years, EUR/USD Little Changed
German Q2 GDP and EUR/USD Price, News and Analysis:
- German Q2 GDP contracts by 10.1%.
- EUR/USD little changed on the news.
The first look at German economic activity in the second quarter showed economic activity slumping, according to the German Federal Statistical Office Destatis. The q/q fall of 10.1% was the largest decline since quarterly GDP calculations began in 1970. According to Destatis, the decline was ‘much larger than during the financial market and economic crisis (-4.7% in Q1 2009) and…a massive slump was recorded for exports and imports of goods and services’.
Fears of a second wave of COVID-19 remain in Germany with Wednesday’s data showing new cases hitting an unwanted six-week high. Although sharply below levels seen in late March/early April, any acceleration in this upward trend will once again weigh on the German economy.
Chart via Worldometers.Info
German unemployment data released earlier beat expectations with the unemployment change falling by 18k compared to estimates of an increase of 43k. The unemployment rate remained steady at 6.4%.
The data calendar needs to be closely watched for this afternoon’s US Q2 GDP reading (13:30 BST) and Friday’s Eurozone Q2 growth report (10:00 BST) and fundamental analysis remains key.
EUR/USD is currently shrugging off the German data and remains steady around 1.1755. The pair briefly broke above 1.1800 yesterday, a near two-year high, and the net move will likely be driven by Friday’s US Q2 GDP release. A series of higher lows continue to support the move higher, although a period of consolidation may be needed to move the pair out of overbought territory (CCI).
EUR/USD Daily Price Chart (January – July 30, 2020)
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