Market Commentary and Intraday News

Euro Extends Rally Amid French And German GDP Reports

281 days ago

(RTTNews) - The euro has extended its Asian session gains against most major currencies on Tuesday after the releases of the preliminary second quarter GDP reports from France and Germany.

Though the euro showed limited reaction immediately after the releases, it has broadly extended gains.

The French economy recorded zero growth sequentially for a third consecutive quarter in the three months through June, the preliminary figures released by the statistical office Insee showed.

Economists had forecast a 0.1 percent contraction in the Gross Domestic Product. The fourth quarter 2011 GDP was revised to show no growth from the previously reported 0.1 percent growth.

Meanwhile, preliminary estimates from the Federal Statistical Office showed that Germany's gross domestic product rose 0.3 percent quarter-on-quarter in the second quarter, beating expectations for a 0.2 percent growth.

This followed a 0.5 percent expansion in GDP in the first quarter and 0.1 percent contraction in the fourth quarter of 2011.

The euro-dollar pair that closed yesterday's trading at 1.2333 rose to 1.2369. On the upside, 1.240 is seen as the next target level for the single currency.

The euro jumped to a 4-day high of 0.7880 against the pound and 5-day highs of 1.2015 against the franc and 97.25 against the yen, compared to yesterday's close of 0.7865, 1.2012 and 96.61, respectively. The next upside target level for the euro is seen at 97.4 against the yen, 0.790 against the pound and 1.2020 against the pound.

Looking ahead, Swiss producer and import prices and the U.K. CPI - both for July, Eurozone preliminary second quarter GDP and industrial production for June and the German ZEW economic sentiment index for August are expected to influence trading in the coming hours.

The U.S. PPI and retail sales for July and the business inventories for June are scheduled for release in the New York morning session.

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