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    Euro GDP in focus

    With the exception of Greece, the Eurozone is still ticking along with minor growth but by historical standards there is a lot more wriggle room in either direction. 

     


    View related analysis:
    TECHNICALLY SPEAKING: EUR and DAX
    THE WEEK AHEAD: US data back in the loop




    EURUSD sits at key support as we approach German and European data for the last trading session of the week. As we approach next week, the structure within the bullish channel will warrant closer attention as we ascertain the near-term trend. With industrial production, inflation data and FOMC minutes for the US alongside European inflation data then I would expect a meaningful move to develop on the 'anti-dollar'. 

    Speaking earlier today (pre NY close) FED chair lady Yellen spoke of consideration for negative rates in US, also highlighting the need to take unintended consequences into account. Whilst this clearly does not mean the US are ready to reverse course and cut rates, it is worth noting that are at least considering the opposite side of the rate cycle they claim to be in (which is hawkish, for those who are probably confused about the FEDs real intentions just as the area). 




    I have also covered EURUSD in today's video but for the purpose of print, the chart is also above. Timing wise (and whilst above support) EURUSD looks as though it may want to pop higher. However, a clear break below last week's low could assume a run towards the 50eMA and potentially the 1.1210 lows. However, for the latter to materialise any time soon we would need to see hawkish tones within Wednesday's FOMC minutes, which seems a little less likely taken the talk of negative rates again.

    If anything the notes are more likely to reveal they are 'sheepishly hawkish' as opposed to cautiously optimistic.



    In preparation for next week's GDP, I have included a relative GDP view for Euro Area against the constituent economies. With the exception of Sweden, all are a long way off from their record highs and Greece unsurprisingly still within contraction. Whilst growth is still apparent there is a room for a lot more upside but then, comparing to historical lows, even more room for downside. Growth is likely to drag in the quarter's ahead for the main part of the Euro Area, so further easing and a weaker Euro is a more likely view as the USD regains its strength. 

    To finish up I have compared global GDP for a quick comparison in regards to where we are and where we have been in the past. 



     


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