After June’s prelim private sector PMIs on Wednesday, German business sentiment and Spanish GDP numbers were in focus this morning. From the ECB, the Economic Bulletin also drew attention this morning.
Spain
The numbers out of Spain were slightly better than prelim figures.
In the 1st quarter, the Spanish economy contracted by 0.4%, revised up from a prelim 0.5% contraction. Year-on-year, the economy contracted by 4.2%, which was up from a prelim 4.3% contraction.
Back in the 4th quarter of last year, the economy had stalled, leading to an 8.9% contraction, year-on-year.
Germany
In June, the Ifo Business Climate Index rose from 99.2 to 101.8 in June. Economists had forecast an increase to 100.6.
The Business Expectations sub-index increased from 102.9 to 104.0, with the Current Assessment sub-index climbing from 95.7 to 99.6. Economists had forecasted increases to 103.9 and to 97.8 respectively.
The Economic Bulletin
Following ECB President’s optimistic chatter from earlier in the week, the Economic Bulletin had greater significance than usual.
Salient points from the Bulletin Summary included:
- The latest data signal a bounce-back in services activity and ongoing dynamism in manufacturing production.
- Economic activity is expected to accelerate in the 2nd half of this year, as further containment measures are lifted.
- A pickup in consumer spending, strong global demand, and accommodative fiscal and monetary policies will lend crucial support to the recovery.
- Uncertainties remain, however, as the near-term economic outlook continues to depend on the course of the pandemic and on how the economy responds after reopening.
- Inflation has picked up as a result of transitory factor and an increase in energy prices. It is expected to rise further through the 2nd half of the year before declining as temporary factors fade out.
- Headline inflation is expected to remain below the Governing Council’s aim over the projection horizon.
Market Impact
Ahead of today’s stats, the EUR had fallen to a pre-stat and current day low $1.19178 before finding support.
In response to the GDP numbers from Spain, the EUR rose to a current day high $1.19430 before easing back.
The ECB’s Economic Bulletin and German business sentiment figures had a greater impact, however.
In response to the bulletin and stats from Germany, the EUR rose to a post release high 1.19359 before falling to a post-release low $1.19268.
At the time of writing, the EUR was up by 0.05% to $1.19325.
Next Up
Core durable goods and durable goods orders, finalized GDP numbers, and the weekly jobless claim figures from the U.S.
Expect the core durable goods orders and jobless claims figures to be the key drivers later in the day.