The EUR/USD edged to a fresh new high against the greenback, in the wake of the U.S. employment report on Friday, but has since moved lower, falling back to the 1.0950 range. During the dog days of summer, there will be a few impetus that will shake the currency markets in the week ahead.
Data releases focus on Q2 GDP numbers which are scheduled for Friday and the more forward looking German ZEW reading for July which is scheduled for Tuesday. French GDP growth is expected at 0.3% q/q in Q2, down from 0.6% q/q in the first quarter of the year. French PMI readings continue to underperform and the economy remains dragged down by structural problems. Italian confidence has been stronger and the economy moved out of recession with GDP growth expected at 0.3% q/q, unchanged from Q1.
For now at least the German economy still looks healthy, with Q2 GDP expected to come in at 0.5% q/q . Consumption is driving domestic demand and trade data also pointing to a positive contribution from net exports in Q2. Investment remains a weak spot, however, and the above average rise in unit-labor and wage costs is likely to come back to haunt the Eurozone’s largest economy in the future. The data mix should leave overall Eurozone Q2 GDP at 0.4% q/q, also unchanged from the first quarter.