With Germanys economy forming a large part of the EU`s overall economic activity, traders look to the German economy for signs of how the EU at large is performing. The EUR has found some support of late as political instability is minimized with the voting in of Macron as President of France, averting the much feared Frexit which would have been on the cards had La Pen won. The political bullishness is key to the strength of the EU, but ultimately, it is the fundamental performance of the zone and its largest members that will determine the outcome for the EUR in the near future. Today’s fundamental releases from Germany will be closely scrutinized with the EUR either graining or losing, depending on the outcome.
First up, we have the release of the Buba Monthly report out of Germany, which will give markets an insight into how the German central Bank sees the health of the German economy with a detailed analysis of the current and future economic condition from the banks viewpoint. If the Buba report is optimistic, we would see traders buying the EUR in anticipation of the better performing German economy lifting the EU as a whole. However, if the report is more pessimistic than expected, we would see traders sell the EUR in anticipation of the weakening German economy dragging down the EU economy.
We then have the release of the Final GDP q/q figure out of Germany, previously at 0.6%, will indicate to what extent the German economy has grown over the last quarter. The figure measures the inflation adjusted value of all goods and services produced in the country and is the broadest measure of economic activity and therefore the primary gauge of the economic health of the country. A better than expected print will see the EUR strengthen while a worse than expected release will see the EUR weaken.