Both German and French GDP data for Q2 printed better than expected contributing to a more constructive tone for EURUSD which traded above the 1.2350 level in early morning European trade. German GDP rose 0.3% versus 0.2% eyed while French data rose 0.3% versus forecasts of 0.2%.
In France inventories added 0.3% to the final figures while domestic demand contributed 0.1% to the overall reading. Unsurprisingly private consumption declined by -0.2% while fixed capital investment increased markedly by 0.6% on a q/q basis from a decline of -0.8% the quarter prior. In Germany the seasonally unadjusted figures were actually lower at 0.5% versus 0.9% eyed but the weighted day average numbers came in essentially in line at 1.0% versus 1.1%.
The news provided a boost to equities and risk appetite as it showed that growth in Europe two core economies slowed, but did not contract despite the ongoing turmoil in the regionâ€™s sovereign debt markets. The euro continued to improve in the first hour of European trade rising to 1.2380 and as the day proceeds could target the key 1.2400 level which has served as stiff resistance over the past few weeks.