Today’s major headline news has been the surge in preliminary gross domestic product (GDP) numbers out of France and Germany. Both of these euro zone giants released data which helped the region’s currency partially shore up recent losses, though similar data out of Italy was disappointing for regional investors.
France led the day with an early 6:15 GMT release of its GDP data, highlighting the solid 1.0% growth in the first half of the second quarter, beating expectations for only a 0.4% gain. Germany was not far behind at 7:00 GMT, publishing an even higher 1.5% growth, well above the forecast of 0.9% growth.
These figures have so far helped the EUR regain a solid portion of its losses from earlier this week against the US dollar (USD) and British pound (GBP). But data from Italy put a temporary halt to the region’s currency gains with a faltering 0.1% growth coming in below an anticipated 0.3% reading.
Overall, the euro zone’s flash GDP data revealed 0.8% growth for the first half of this quarter; not bad considering recent fundamentals. Forex traders were looking to the inflationary data out of the United States in order to better assess their risk exposure ahead of the weekend.
With solid CPI data published by the US Bureau of Labor Statistics in line with expectations at 13:30 GMT today, traders felt comfortable with moving additional funds into their EUR long positions. The University of Michigan’s (UoM) inflation expectations report also revealed anticipation for solid growth in the American market this quarter.
As a result, some profit taking was seen on the USD, pushing the EUR/USD pair back towards 1.4230 by late afternoon trading. Market optimism surged Friday, with expectations appearing to favor a return to risk by early next week if data continues to get published in line with recent growth figures.