Euro Rises As German Economy Expands Unexpectedly
30 October 2024 - 5:55PM
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The euro strengthened against other major currencies in the
European session on Wednesday, after the German economy expanded
unexpected in the third quarter, underpinned by household and
government consumption.
The preliminary estimate data from Destatis showed that the
gross domestic product grew 0.2 percent from a quarter ago, in
contrast to the revised 0.3 percent contraction posted in the
second quarter. GDP was expected to fall 0.1 percent.
With the latest growth, the largest euro area economy avoided a
technical recession.
On a yearly basis, calendar-adjusted GDP logged an expansion of
0.2 percent, reversing the second quarter's 0.3 percent
decline.
Meanwhile, the price-adjusted GDP grew 0.2 percent on year,
following a 0.1 percent rise in the prior quarter.
The surprising positive Q3 German GDP data dampened expectations
of the European Central Bank's (ECB) larger-than-usual interest
rate cut of 50 basis points (bps) in December.
In economic news, a preliminary flash estimate published by
Eurostat showed that Eurozone economic growth accelerated in the
third quarter. Gross domestic product increased 0.4 percent on a
quarterly basis. GDP was expected to log 0.2 percent growth, the
same rate as seen in the second quarter.
Year-on-year, economic growth improved to 0.9 percent from 0.6
percent in the second quarter. This was also better than
economists' forecast of 0.8 percent.
Meanwhile, traders remain caution ahead of next week's U.S.
presidential election and Federal Reserve rate decision.
In the European trading now, the euro rose to a 3-month high of
166.21 against the yen and a 2-day high of 0.8343 against the
pound, from early lows of 165.59 and 0.8314, respectively. If the
euro extends its uptrend, it is likely to find resistance around
167.00 against the yen and 0.84 against the pound.
Against the U.S. dollar and the Swiss franc, the euro advanced
to 9-day highs of 1.0859 and 0.9405 from early lows of 1.0813 and
0.9371, respectively. The euro may test resistance around 1.10
against the greenback and 0.95 against the franc.
Looking ahead, U.S. MBA weekly mortgage approvals data, U.S. GDP
data for the third quarter, U.S. core price index for the third
quarter, pending home sales data for September and U.S. EIA crude
oil data are slated for release in the New York session.
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