Out of recession, but fade EURUSD gains
GDP data today should show that the Euro area as a whole has exited technical recession in Q2. However, our economists point out that the story remains one of stabilization at an inadequate pace rather than the beginnings of robust recovery. We think the risks remain skewed towards further ECB policy easing and, while today’s data should support the EUR vs. the CHF and GBP, we continue to see scope for renewed downside in EURUSD as the policy divergence theme plays out. In terms of the data, the consensus is for a +0.2% q/q gain. Such a print would likely keep EURUSD heavy. ON the other hand, a print closer to +0.4% q/q may be required to support EURUSD.
Read the full report: FX Daily
BNP Paribas