FxWirePro: German GDP flashes attempt to cushion Euro gains but not suffice to jack-up from sideways range

FX rates among G10 space evidence no clear propensity ahead of the weekend. That is not surprising, given the absence of stimuli from the Fed or from general market sentiment (even though last night’s data from China was disappointing, see below) – and the trend of American monetary policy and risk appetite have recently been the main factors driving the foreign exchange market.

Nor is much happening on the data front today. In Europe, GDP data is line with forecasts at 0.3%. German growth data surprised to the upside, prints upbeat flashes at 0.4% versus 0.3%, while Italy has missed the estimates, actual 0.0% versus forecasts at 0.2% and previous 0.3%, these decline in quarterly flashes would no doubt be watching at very closely is unlikely to attract much attention in the forex market.

To substantiate this, yesterday, German industrial production missed the forecasts to disappoint the analysts in Eurozone, actual 0.8% versus forecasts at 0.9%.

Germany posted EUR 21.7 billion trade surplus in July of 2016 against forecasts at 23.2B as exports rose more than imports.

While French industrial production (MoM) has shown a massive dip from the previous -0.5% to the current -0.8%.

Italian trade balance is also no exception to add stress in Eurozone, has declined from the previous 5.03B to the current 4.66B.

German GDP QoQ is scheduled to be announced tomorrow, and it is likely to be contracted to 0.3% from the previous flash of 0.7%.

After all, the initial estimate for the euro zone has already appeared. The second publication has little potential for surprises even after the strong German data.

EUR/USD’s non-directional pattern is persisting from more than last one year or so, but some bullish neutral indications are observed, slight bearish pressures can be seen in the months to come, hence, there is a massive collapse in implied volatilities as well an OTC FX market.

Overall, even though the euro against the dollar has gained a bit, the neutral phase remains intact and only a clear break out of the expected 1.1020/1.1260 sideway trading range would indicate the start of a sustained directional move.