- Eurozone GDP Posts Record Contraction, Markets Unfazed
- EUR/USD Puts in Yet Another Strong Performance
Eurozone GDP Posts Record Contraction, Markets Unfazed
Eurozone GDP posted the largest contraction on record of 12.1% (records began in 1995), slightly below expectations of 12%, while the yearly rate showed a 15% contraction, against expectations of -14.5%. In reaction, the Euro was relatively muted, while the DAX trades at pre-announced levels given that the data is largely looking at the Eurozone economy from a rearview mirror and thus has largely been factored in.
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One Record Contraction in GDP After Another
Path of Recovery in Focus
That said, with Eurozone activity picking up since the depths of the crisis, the focus going forward is on the path of the recovery. Although, with COVID cases beginning to flare up yet again across Europe, that path is at a material risk of stalling and thus, more timely high-frequency data points will be key to watch out for.
EUR/USD Puts in Yet Another Strong Performance
Yesterday saw the Euro break above 1.18to test 1.19 during overnight trade further suggesting that strong momentum remains firm for the Euro. The path of least resistance is higher in EUR/USD, however, as we noted yesterday for the US Dollar, there is a possibility for a healthy correction in the greenback, therefore, there is the potential for the Euro to pullback before another push higher. Although, when that happens exactly is a little more uncertain, perhaps the first approach on 1.20. Elsewhere, given that today is the last trading day of the month, keep in mind that there will be plenty of month-end noise around 1500-1600BST.
EUR/USD Price Chart: Weekly Time Frame