By Vincent Mivelaz
Whereas the EU economy is losing steam in Q1 due to hovering commercial tensions during the period, presenting weaker Q1 gross domestic product (GDP) data (q/q: +0.40% and y/y: +2.50%), Italy is showing the way. Italian economic growth reached 0.30% during first quarter (1.40% y/y), in line with fourth quarter 2017 and maintained at constant pace since third quarter 2013.
In the middle of continuing government coalition talks, which slowly confirms the formation of a government composed of right-wing League Party with the Five Star Movement, the potential of stronger economic growth from the third largest European economy is expected, as GDP growth highs from 2011 could be reachable (above 2%), if economic background allows it.
As the unemployment rate retreats among eurozone countries since 2013 high, supported by an acceleration in producer prices, increasing wage growth and improving consumer confidence as of April, we would suggest that the European economy is set to rise upward. EU diplomatic stance appears to turn in its favour, as US commercial pressures seem gently to vanish, thus supporting exporting industries within the country.
It is only a matter of time before the EUR/USD pair strong decline below the 1.20 range recovers from recent low at 1.1938 (02/05/2018). We would therefore suggest that an increase above 1.2005 is feasible in the very short-term.
Disclaimer: While every effort has been made to ensure that the datat quoted and used for the research behind this document is reliable, there is no guarantee that it is correct, and Swissquote Bank and its subsidiaries can accept no liability whatsoever in respect of any errors or omissions, or regarding the accuracy, completeness or reliability of the information contained herein. This document does not constitute a recommendation o sell and/or buy any financial products and is not to be considered as a solicitation and/or an offer to enter into any transaction. This document is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or in any other kind of investment.
Although every investment involves some degree of risk, the risk of loss trading off-exchange forex contracts can be substantial. Therefore if you are considering trading in this market, you should be aware of the risks associated with this product so you can make informed decisions prior to investing. The material presented here in not to be construed as trading advice or strategy. Swissquote Bank makes a strong effort to use reliable, expansive information, but we make no representation that it is accurate or complete. In addition, we have no obligation to notify you when opinions or data in this material change. Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other instruments.