German 4th Quarter GDP Revisions Support the DAX30 and the EUR

Following a busier Asian session, it was another relatively quiet day on the Eurozone economic calendar.

German 2^nd estimate GDP numbers for the 4^th quarter were in focus this morning.

Better Than Expected

In the 4^th quarter, the German economy grew by 0.3%, quarter-on-quarter. This was an upward revision to a 1^st estimate growth of 0.1%. In the 3^rd quarter, the German economy had expanded by 8.5%.

Year-on-year, the German economy contracted by 2.7%, revised up from a 1^st estimate 2.9% contraction. In the 3^rd quarter, the German economy had contracted by 3.9%.

According to Destatis,

• The second wave of the COVID-19 pandemic slowed the economic recovery in the final quarter of 2020.
• Household final consumption expenditure was down 3.3%, quarter-on-quarter.
• Government final consumption expenditure declined by 0.5%, following increases in the previous 3 quarters.
• Gross fixed capital formation in construction (+1.8%) contributed to growth in the 4^th quarter
• Foreign trade increased at the end of the year and had an upward effect on GDP. In Q4, exports of goods and services were up 4.5%, quarter on quarter. Imports increased by a lesser 3.7%

Market Impact

Ahead of the stats, it was a mixed start to the day for the EUR, which had risen to an early high $1.21663 before falling to a pre-stat low of $1.21441.

Upon the release of the inflation figures, the EUR moved from $1.21568 to a post-stat high $1.21747 before easing back.

At the time of writing, the EUR was up by 0.11% to $1.21631.

The upward revision also supported the DAX, which peaked with a 0.93% rise in response before easing back. At the time of writing, the DAX was up by 0.58%.

While the numbers were market positive, the upside was limited, however. Economic uncertainty continues to linger amidst extended COVID-19 containment measures.

Next Up

Day two of FED Chair Powell testimony and new home sales figures. Don’t expect too much direction from real estate sector numbers, however.