Eurozone Momentum Growing With PMI Data In Focus
he euro traded steadily above $1.33 after second quarter GDP data confirmed that the eurozone finally exited its 18 month recession. Now, the currency could climb even higher as economists expect this week's German data to further support the region's growing momentum.
According to a poll by Bloomberg, economists predicted that purchasing managers' surveys in German manufacturing and services sectors will show that activity has picked up in August. German producer prices are also likely to have risen by 0.2 percent from June to July, which would mark the first increase in six months.
PMI data for the region as a whole is also expected to be positive, although some eurozone members like Spain and Italy are not likely to have reached above the 50 point benchmark that indicates growth. If the PMI data follows the recent upward trend seen in recent eurozone data, the bloc's modest growth will likely continue into the third quarter.
Politics in the eurozone could throw off the region's progress as September general elections in Germany approach. Although current Chancellor Angela Merkel's coalition is expected to be returned to power, a small anti-euro party has been gaining momentum and threatening to take votes from Merkel's junior coalition partner, the Free Democrats.
The small radical party, called AfD, is considered unlikely as a candidate as it has yet to garner the 5 percent of votes needed to compete in the election. However, AfD seems to appeal to Free Democrat supporters and could steal enough votes to keep the group from entering Germany's parliament.
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