The Euro has struggled to break free of its 2 day tight trading range against the US dollar despite Disappointing US GDP figures which led to market expectations for a less hawkish Fed going forward with the perception that inflationary pressures might be easing.
The commerce department announced Thursday that gross domestic product (GDP) – a broad measure of the price of goods and services – decreased at an annualized rate of 0.9% in the second quarter after falling at an annualized rate of 1.6% in the first three months.
The bad news will be a major blow for the Biden administration as it prepares for a tough midterm election season. White House officials have tried to tamp down talk of a recession, arguing that many parts of the economy remain strong.
The growth rate stands in marked contrast to the robust 6.9% annual increase in GDP recorded in the final quarter of 2021 when the economy roared back from Covid shutdowns.
“The 0.9% annualized fall in GDP in the second quarter is disappointing but doesn’t mean the economy is in recession,” said Andrew Hunter, senior US economist at Capital Economics.
“That said, the details show that higher rates and surging inflation are weighing on underlying demand, and we expect only a muted rebound in economic growth over the second half of the year.”
Even quarterly GDP figures from the Eurozone failed to inspire the Euro today and it seems like market participants are over looking positive economic data out of the Eurozone and instead are focused on the possible recession looming and the energy crises that’s building after Russia ceased to supply gas through the Nord Stream 1 pipeline.
GDP figures hit the market at 0.7 percent on a quarterly basis against analysts expectations for a figure of 0.2 percent while the yearly figures came in at 4 percent against consensus for a number of 3.4 percent.