- Euro (EUR) extends gains despite German economy contracting -10.1% QoQ in Q2
- Eurozone GDP expected to show -12% decline
- US Dollar (USD) decline continues as fears over economic recovery dominate and labour market recover stalls
- US personal consumption & consumer sentiment in focus
The Euro US Dollar (EUR/USD) exchange rate is advancing for a third straight session on Friday, as it flirts with US$1.19. The pair settled +0.5% at US$1.1847 on Wednesday.
At 07:15 UTC, EUR/USD trades +0.4% at US$1.1890 after briefly piercing US$1.19 to hit US$1.1908 its highest level since June 2019.
German GDP plunged in the April – June period, slumping the mot since the 1970’s as the coronavirus lockdown impacted every sector of the economy. The Germany economy contracted by a worse than feared -10.1% quarter on quarter, which equated to a, -11.7% year on year contraction.
GDP data is expected to dominate again for the Euro with the release of Eurozone GDP data. Analysts are expecting a -12% contraction in Q2.
The US Dollar selloff continues. The greenback trades at a 2 year low versus a basket of currencies (USD Index). The currency is on track for its worst monthly performance in over 10 years. Fears that the US economy is being hit by a second wave of coronavirus is dragging heavily on the Dollar.
According to Federal Reserve Chair Jerome Powell, high frequency data shows that the increase in coronavirus infections since mid-June has curbed consumption, sending the US economy downhill.
Data in the previous session showed that the US economy contracted 32.9% on an annual basis in the second quarter. This equates to -9.5% contraction quarter on quarter, in the deepest recession since the Great Depression.
Whilst data had improved since then, more recent data indicates that the US economic recovery is losing momentum. US initial jobless claims increased compared to the previous week, whilst continuing claims remain elevated over 17 million pointing to the recovery in the labour market stalling.
President Trump suggesting that the Presidential elections should be delayed sucked out any remaining confidence in the greenback
Today investors will look towards personal consumption expenditure data and consumer sentiment.
