Euro area economy grows 0.6 pct sequentially in Q2, domestic demand growth likely to remain strong

The economic data-flow for the euro area was in line with the European Central Bank’s upbeat growth outlook. The euro area economic growth for the second quarter affirmed the flash estimate of 0.6 percent quarter-on-quarter, up 0.1 percentage point from the first quarter. Also, revisions to earlier quarters saw the annual rate upwardly revised by 0.1 percentage point to 2.3 percent year-on-year, the highest in over six years.

Growth in the latest quarter was widespread, with private consumption and fixed investment rising widely consistent with their trends of the past few years, while government consumption was slightly stronger than recent norms, and net trade made positive contribution to GDP growth for the second straight quarter. Surveys imply that domestic demand growth is expected to stay strong close to recent rates, noted Daiwa Capital Markets Research.

“But given the stronger euro, net trade seems likely to become a mild drag once again, just as it was throughout the second half of 2015 and all of last year”, added Daiwa Capital Markets Research.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bullish 114.18, while the FxWirePro's Hourly Strength Index of US Dollar was bearish at -91.7258. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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