A truce seems to have been found between the EU and the US – at least for now. But this positive news has to be converted into facts, and this will certainly take time. For now, the German economy provides economic figures, which tell us that the economy was already slowing down in June. Though June trade balance is highest since March 2018 amid exports and imports estimated at EUR 115.5 billion and EUR 93.7 billion (highest monthly import value since first publication in 1950), the German economy is showing a slowdown in production figures.
Indeed, given at -0.90% (consensus: -0.50%), m/m June industrial production figure along with y/y numbers are lower, suggesting a global slowdown in manufacturing activities across the country, despite strong economic numbers in May.
Therefore, we expect Q2 GDP q/q numbers (published on 14. August 2018) to remain slightly above Q1, along 0.40% while it should slow down in the next periods. Strong economic confidence, private consumption and inflation at 2% remain supportive for the second quarter 2018.
EUR/USD is currently trading at 1.1586, expected to decline along 1.1555 in the short-term.
By Vincent Mivelaz