- German GDP shrinks in Q3
- US to release manufacturing and services PMIs
The euro is almost unchanged on Friday. In the European session, EUR/USD is trading at 1.0903, down 0.03%.
German Economy Declines
German GDP posted a minor drop in the third quarter, coming in at -0.1% q/q. This was down slightly from -0.1% in the second quarter and matched the market consensus. On an annualized basis, GDP declined by 0.4%, down from a revised o.1% gain in Q2 and missing the market consensus of -0.3%. The consumer spending component of GDP decelerated in the third quarter and was a key driver of the decline in GDP. German consumers remain in a sour mood and are being squeezed by rising interest rates and a high inflation rate of 3.8%.
The German business sector is also pessimistic about economic conditions. The Ifo Business Climate index managed to climb to 87.3 in November, up from 86.9 in October but below the market consensus of 87.5. A reading below 100 indicates that a majority of the companies surveyed expect business conditions to deteriorate in the next six months. Earlier this week, German services and manufacturing PMIs came in below 50, which points to a contraction. The manufacturing sector is particularly weak and has been in decline since June 2022.
It has been a relatively light week for US releases, with markets back in action after the Thanksgiving holiday. Later today, the US will release manufacturing and services PMIs, with little change expected. Still, the markets will be watching carefully, as the data will provide insights into the strength of the US economy. The consensus estimates for November are 49.8 for manufacturing (Oct: 50.0) and 50.4 for services (Oct. 49.8). If the readings diverge significantly from the estimates, we could see some strong movement from the US dollar before the weekend.
EUR/USD Technical
- There is resistance at 1.0943 and 1.0997
- 1.0831 and 1.0748 are providing support
