- Euro (EUR) trends lower ahead of German GDP
- French Q4 GDP -1.3% vs -4% exp.
- US Dollar (USD) rises amid financial market turmoil
- US Q4 GDP +4%
The Euro US Dollar (EUR/USD) exchange rate is edging lower on Friday. The pair settled +0.1% higher on Thursday at US$1.2121. At 08:15 UTC, EUR/USD trades -0.1% at US$1.2105. The pair is set to lose -0.5% across the week and -0.85% across the month of January after two months of gains.
The Euro is under pressure amid a risk off mood in the market which is supporting the safe haven US Dollar.
French GDP data offered some support to the common currency. The French economy fell back into contraction in the final quarter of the year, but not by as much as analysts had feared. The Eurozone’s second largest economy contracted by -1.3% in the October – December period, better than the -4% contraction forecast. On an annual basis the economy contracted -8.3%, ahead of the -11% contraction forecast.
Attention will now turn German and Spanish GDP data which is due to be released shortly. Analysts expect 0% growth quarter on quarter in the Eurozone’s largest economy after 8.5% growth in the third quarter. This would result in a 4% GDP contraction on an annualised basis.
The US Dollar is pushing higher in early trade on Friday supported by safe haven risk flows on the back of the turmoil in the equity markets. Equities on Wall Street are on track for their worst week since the end of October. Hedge funds have been forced t liquidate positions in order to raise funds to cover their short positions after a surge of buying demand from retail traders. GameStop started the movement which has since spread to include AMC Entertainment, American Airlines, Blackberry among others.
The high levels of volatility has sent investors in search of the US Dollar for its safe haven properties.
Yesterday Q4 US GDP data showed that the economy expanded in Q4 but at a much slower pace of 4% annually.