When are Eurozone Q3 GDP and how could it affect EUR/USD?
The Eurozone Q3 GDP Overview
Eurostat is set to release preliminary Q3 Gross Domestic Product (GDP), seasonally adjusted data, for the Eurozone at 10:00 GMT on Friday.
The flash Eurozone GDP is expected to hold steady at 0.2% quarter-over-quarter (QoQ) growth in the third quarter, while annual growth is projected to stay at 1.3% growth for the same period.
How could the Eurozone Q3 GDP affect EUR/USD?
The EUR/USD pair is expected to continue its winning streak that began on November 5, following the release of Eurozone Q3 GDP data. The Euro (EUR) receives support against its peers as traders expect the European Central Bank (ECB) to remain cautious regarding its monetary policy outlook. The ECB is widely expected to keep rates unchanged, supported by stable economic performance and inflation near target. Traders will also likely observe the preliminary Employment Change data for the third quarter.
The EUR/USD pair also gains support as the US Dollar (USD) stays subdued amid uncertainty over delayed US economic data following the prolonged government impasse. National Economic Council Director Kevin Hassett warned that some October data may “never materialize” because several agencies were unable to collect information during the shutdown.
Technically, the EUR/USD pair is trading around 1.1650 at the time of writing. The technical analysis of the daily chart suggests an ongoing bullish bias as the 14-day Relative Strength Index (RSI) is positioned above the 50 mark. The pair may explore the resistance region around the seven-week high of 1.1778, reached on October 1. On the downside, the immediate resistance appears at the 50-day Exponential Moving Average (EMA) of 1.1623, followed by the confluence support area around the psychological level of 1.1600 and the nine-day EMA at 1.1590.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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