The expected slowdown in the growth rate of the German economy hit the euro. The single European currency fell on concerns about a wider downturn in Europe. The region's largest economy is experiencing a cooling of the global economy and the effects of trade conflicts caused by the policies of US President Donald Trump.
The German economy grew by 1.5 percent in 2018, the lowest in five years. Soon after the release of GDP data, the euro fell to a five-day low of $ 1.1423. The first alarming "bell" for the euro was the unexpected drop in industrial production in Germany, which raised concerns about the ECB's plans to stop stimulating. There is an opinion that, although these figures are in line with expectations, the gloomy picture as a whole reinforces the doubts that the ECB will raise interest rates in general in 2019.
In the short term, the biggest risk for Europe and the euro is the uncoordinated Brexit, which can occur at the most inappropriate moment for the German economy. For the same reason, it is necessary to closely monitor the sterling on the eve of a vote in parliament.
The dollar is growing and overall looks very attractive against this background, despite recent losses caused by fears of a global slowdown and expectations of a pause in the Fed's rate hike this year.
The material has been provided by InstaForex Company - www.instaforex.com