14, November 2017

German GDP data led Eur/Usd out of consolidation, as pair gained above 1.1710

In the third quarter, the German economy showed growth exceeding expectations, relying on global demand and higher corporate investment.

German gross domestic product, the main economic indicator of goods and services produced in the economy, increased with an annual rate of 3.3% compared to 2.6% in the second quarter, the Federal Statistical Office reported on Tuesday. The figures exceeded expectations by 2.4%. In addition, the official statistical office increased its estimate of GDP growth in the first quarter to an annual rate of 3.6% of the earlier estimate of 2.9%. Growth in the third quarter was due to improved foreign trade amid rising demand for high-quality tools and mechanisms.

Economic activity in Europe's largest economy remains very high, the job market remains stable, despite the strengthening of the European currency, which reduces the price competitiveness of German goods, geopolitical tensions and the threat of increased trade protectionism.

In recent years, Germany has been stimulating the economic recovery of the Eurozone, there are clear signs that the region's economy has entered a phase of expansion and is becoming more stable. For example, Spain's economy is expected to grow by 3% this year.

The FOREX currency market reacted to the statistical data by the strengthening of the European currency. European currency showed a strong closure of the previous week and it was expectable the euro was just waiting for driver to move higher. The new week Eur/Usd began close the important resistance level of $1.1665, and finally today  Eur/Usd pair gained to 1.1710 area, testing this strategic resistance.

Today, the trading day is full of news, so the dynamics of trading will largely be determined by fundamental factors and statistical data. In addition to data on the German economy, investors will focus on the conference-taking place these days in Frankfurt. Yellen, Draghi, Carney and Kuroda should take part in the conference and provide some insight for monetary policy plans. From the heads of regulators, investors are waiting for comments on further plans for implementing monetary policy of their country.

On FOREX, most currency pairs retain narrow price ranges. Relative consolidation has been maintained for several days. Against this background, today we can expect an increase in volatility.

A little later in US there will be data on the producer price index. Inflation in the US remains below a certain Fed target of 2%, so investors are closely monitoring all inflationary indicators. The market reaction can be quite significant.

Market participants expect news from the US on tax reform. Many believe that the situation may be resolved this week. Important news related to this event can appear at any moment and have a very strong impact on the market.