EUR/USD Surged With a Robust Growth in Euro-area

By: Eddy Peng Nov 15, 2017
The euro had the biggest gain for more than two months, surging by roughly 0.79 percent to close at 1.17966 on Tuesday, with euro-zone’s statistics showing a robust performance of economic growth. The jump has almost erased all losses occurred in the past three weeks. The European Union statistics office confirmed that Gross Domestic Product (GDP) grew 0.6 percent from July to September from the previous quarter and a year on year basis was 2.5 percent higher, higher than the 2.3 percent year-on-year rate for the U.S. economy, which had been growing faster than the euro zone. The robust performance in euro zone growth was fuelled by the biggest economy Germany, which shifted into an even higher gear in the third quarter, propelled by buoyant exports and rising company investments in equipment. Seasonally adjusted German GDP increased 0.8 percent on the quarter, beating a consensus forecast of 0.6 percent. In addition, a rising domestic demand for the euro zone also powered the strong growth, demonstrated by increasing consumer spending and investment. Among the drivers of domestic demand, consumer spending in the euro area, according to the data below, increased to 1402.33 EUR Billion in the second quarter of 2017 form 1394.83 EUR Billion in the first quarter, maintaining a faster pace started from 2013. ACY-EU-Consumer-Spending-151117 EUR/USD Surged With a Robust Growth in Euro-area

Chart 1: EU Consumer Spending

The result of ZEW (European Economic Research) survey for economic sentiment, which assesses future economic expectations for the whole euro-zone, has set to be 30.9, beating the previous figure of 26.7. It is revealing that market has a stronger optimism to the future economic growth. Economists from Credit Suisse Group and Oxford Economics Institute held the optimistic view towards euro-zone economy, which has been greatly benefited from the golden age, which has a higher pace of expansion with a relatively lower inflation rate. The outlook for the tax reform in the U.S. poses some uncertainties into the market, since the House and the Senate couldn’t reach a consensus concerning the timing difference of its implement. This results some losses in both stock market and currency value. In the event that the tax overhaul couldn’t pass on the Congress in the near future, market drops would be inevitable. Technically, the EUR/USD is consolidating in a descending price channel beginning with the late August. However, its recent rise appears to get downward trend reversed and hit the upper level of the price channel. In the event of it breaks out successfully, traders should watch for next resistance for the pair at Sept. 8’s high of 1.20912. ACY-EURUSD-Daily-151117 EUR/USD Surged With a Robust Growth in Euro-area

Chart 2: EURUSD Daily

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