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Euro steadies versus yen after Germany data points to firmer growth

Germany’s Q2 GDP rose 0.2% quarter on quarter, above estimates, while inflation strengthened in all six states, adding support for expectations of more ECB hikes.

Reported · Written up by our desk · Major Pairs

The euro climbed back from early losses and turned nearly flat against the Japanese yen after preliminary German data, according to FXStreet. The release included Germany’s preliminary Q2 GDP and inflation details from its six states, which traders weighed for the next catalyst in Europe.

Germany’s economy expanded 0.2% quarter on quarter versus 0.1% estimates, following 0.3% growth in the first quarter. On an annualized basis, GDP growth held at 0.9% versus 0.6% estimates, and prior growth was 0.4%.

The inflation readings in all six German states were stronger for July, reinforcing expectations for the forthcoming flash German Harmonized Index of Consumer Prices data. FXStreet said the stronger German inflation backdrop could boost expectations for additional ECB interest rate hikes this year.

For yen direction, investors are focused on upcoming Tokyo Consumer Price Index data and the Bank of Japan’s policy decision on Friday. FXStreet noted analysts at Commerzbank expect the BoJ to leave its overnight call rate unchanged, but argued the outlook and the BoJ’s guidance on timing or tone will matter more than the rate level itself.

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