Germany, the largest economy in the euro-zone, will publish its preliminary Gross Domestic Product report for Q4 at 7:00 GMT today.
The data is expected to show that the economy expanded at an annualized rate of 0.8 percent, following a 1.1 percent expansion in the third quarter.
Germany flirting with recession
That German economy could be staring at recession is easily explained by the fact that it is heavily dependent on the global demand conditions.
Germany’s exports of goods and services make up more than 50 percent of its GDP and more importantly, the likes of IMF have recently warned about a deeper global slowdown in 2019.
Further, the IFO has calculated that German GDP could be permanently lower by 0.2 to 0.5% in the long-run, with larger negative effects in the short-term, according to BBC.
As a result, German recession fears seem to have gripped markets. This is evident from the recent drop in the German bond yields (10-year below 0.10 percent).
A weaker-than-expected preliminary Q4 GDP reading would bolster these fears, sending the EUR to levels below the January low of 1.1215.
On the other hand, a better-than-expected reading could alleviate concerns of a slowdown in the Eurozone’s largest economy, allowing for a minor corrective bounce in EUR/USD.
The pair is currently trading at 1.1278, having clocked a low of 1.1249 earlier today. The news that Trump is considering a 60-day extension of China tariff deadline could keep risk assets better bid and cushion the impact of (potential) below-forecast German GDP reading.
About German Preliminary GDP
The Gross Domestic Product released by the Statistisches Bundesamt Deutschland is a measure of the total value of all goods and services produced by Germany. The GDP is considered as a broad measure of the German economic activity and health. A high reading or a better than expected number has a positive effect on the EUR, while a falling trend is seen as negative (or bearish).
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