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German Growth Drives Euro

Posted by Joseph Trevisani on Nov 14, 2017 5:27:04 PM

Third quarter economic growth in the euro zone kept  to its best pace in six years,  pushing the euro to its biggest one-day gain in five months and its highest level in three weeks.

Gross domestic product expanded 0.6 percent in the 19-member union as it did in the second quarter, led by 0.8 percent growth in Germany, its largest economy.  The 2.5 percent 12 month expansion in the EMU equalled that of the first quarter of 2011 and was the strongest  since the financial crash.  Italy,  the union's third place economy grew 0.5 percent quarterly and 1.8 percent annually. 

The euro rose sharply after the initial German release and continued higher as the Italian and EMU results  were noted by the markets.  Following Monday's close at 1.1665 against the dollar and the high in the Asian session at 1.1675, the united currency gained throughout European and American action, topping at 1.1805 early in the New York afternoon and closing just points below the day's high at 1.1796. up 1.1 percent.

Last month the European Central Bank announced it will temper its support for the EMU economy by reducing its bond purchases  to 30 billion euros a month in Janaury from their current 60 billion but lengthened its program to at least September 2018.  Market reaction to the bank's caution was negative and the euro fell 1.5 percent against the dollar on the day  ending at 1.1650. 

Another factor behind the euro's surge has been the relative lack of antagonistic rhetoric from both sides in the Brexit negotiations as the crunch time approaches for the preliminary agreement.  The EMU is insisting that so-called divorce issues be settled before talks can begin on the future relationship.  

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Chart: WWM Alpha Trader

eur nov 14.png

 

 

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