Stronger German GDP might push Euro and yields to upside

Traders are awaiting first quarter GDP release from Germany at 6:00 GMT.

Past trends -

• After 5% y/y growth in first quarter of 2011, growth had slowed down sharply over the Euro zone debt crisis to -1.6% in first quarter of 2013. However several European reforms, like banking union, and unconventional policy from European Central Bank like Long term refinancing operations (LTRO) and Outright monetary transaction (OMT), pushed economy once again on Growth path.

• Economy grew 1% in second quarter of 2014, 1.2% in third and 1.6% in fourth quarter. Details are shown in chart.

Expectation today -

• Little softer reading is expected in the first quarter of 2015 about 1.1%. Preliminary estimate showed growth rate of 1.1% in quarter one.

Impact -

• Stronger than expected GDP growth will raise hopes for earlier recovery and might Push Euro and Bund yields higher. However any rapid rise in Euro might remain capped as traders are awaiting CPI release from US later in the day.

Euro is currently trading at 1.114, up 0.33% today so far. Support lies at 1.107 while resistance at 1.116.

German 10 year CFD closed at closed yesterday around 153.4, stronger GDP would push it down, and 152 remains strong support while 155 resistance.