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All  of the euro-zone’s  three largest countries have published their GDP  numbers, and they all fell short of expectations.

This is dragging the euro down as we have another Greek drama in the background.

  • France reported first: the second largest economy did not grow in Q2, lower than +0.2% expected. However, there was a silver lining here: an upwards revision of Q1 to 0.7%.
  • Germany, the zone’s largest country, slightly disappointed with a growth rate of 0.4% instead of 0.5% expected. This came after an  unchanged +0.3% in Q1. Also here we had a silver lining: an a better than expected y/y figure of 1.6% against 1.5% expected, + a revision to the previous y/y number.  The euro began  weakening but managed to hold some ground.
  • Italy, the zone’s third largest economy reported +0.2%, worse than +0.3% predicted. Yet again, y/y it was 0.5% as expected. Now, that already hurt the euro, serving as the straw that broke the camel’s back.

EUR/USD fell to 1.1125. We will soon get the  official number for the full euro-zone.

In the background, the  Greek parliament approves bailout but Germany likely to fail it in the Eurogroup.

Germany seems very skeptical and perhaps wanting to fail a deal. Having a deal means dealing with debt restructuring.

How will EUR/USD close the week? We still have data from  Europe and figures from the US as well: PPI and consumer confidence will set the last word.

In our later podcast we discuss predictable currencies vs. unpredictable central banks.

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