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Euro Gets a Mild Lift From German GDP

Last updated 11/15/2011 2:44 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

German GDP for Q3 rose by 0.5% in line with forecasts while data for Q2 of this year was upwardly revised to 0.3% from 0.1% originally reported. Strong labor market performance has finally had a positive impact on consumption helping to lift growth in Q3. Production activity picked up markedly in the July through September period  helping to fuel expansion in Q3 but the contribution of trade and investment were somewhat muted as imports offset exports and increases in equipment investment were counterbalanced by declines in construction.

Overall the Q3 GDP data from Germany produced a solid result and suggesting that the headline number for the EZ region as a whole should meet expectations as well. However, currency markets are much more concerned about the prospect of growth into the year end, as many analysts fear that Europe’s largest economy may have stalled to the point of contraction due to the burgeoning credit crisis in the region  and slowdown in global demand.

The EUR/USD  rose by about 20 points in the aftermath of the news hitting 1.3620 in short covering ahead of the European open,  but traders will continue to keep a wary EZ peripheral bonds spreads as well as ZEW survey data due at 10:00 GMT to get clues to direction going forward.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.