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Economic Data from Germany Delivers EUR Support

By:
Bob Mason
Published: May 25, 2021, 12:37 UTC

The EUR got an early boost, with better than expected business climate and sub-index figures delivering support. Downward revisions to GDP numbers had a muted impact on the EUR.

euro background

In this article:

Economic data from the Eurozone was on the busier side this morning with GDP and business climate figures in focus this morning.

German GDP

In the 1st quarter, the German economy contracted by 1.8%, quarter-on-quarter, down from a prelim 1.7%. In the 4th quarter of last year, the economy had expanded by 0.5%.

According to Destatis,

  • Household final consumption expenditure fell by 5.4%, quarter-on-quarter.
  • Government final consumption expenditure rose by a modest 0.2%.
  • Gross fixed capital formation in construction rose by 1.1%, while GFCF in machinery and equipment slipped by 0.2%.

Year-on-year, the economy contracted by 3.1%.

IFO Business Climate

In May, the IFO Business Climate Index increased from 96.6 to 99.2. Economists had forecast an increase to 97.8.

Optimism improved, with the Business Expectations Index rising from 99.2 to 102.9. Assessment of current conditions also improved, with the Current Assessment Index climbing from 94.2 to 95.7.

Economists had forecast increases to 101.4 and to 95.5 respectively.

According to the IFO survey,

  • In manufacturing, the index rose modestly, with expectations falling, while firms remained satisfied with current conditions.
  • For the services sector, the Business Climate Index climbed to its highest level since Feb-2020. A marked rise in optimism and improved sentiment towards current conditions supported the upswing.
  • The index for trade was also on the rise. Firms were less pessimistic about what lies ahead, with sentiment towards the current situation seeing further improvement.

Market Impact

Ahead of the numbers the EUR had fallen to a pre-stat and current day low $1.22116 before rising to a pre-stat high $1.22315.

In response to today’s stats, the EUR rose from $1.22207 to a post-stat and current day high $1.22666.

At the time of writing, the EUR was up by 0.37% to $1.22610.

EURUSD 250521 Hourly Chart

Next Up

Consumer confidence figures from the U.S.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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