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Germany Q2 final GDP -9.7% vs -10.1% q/q prelim

  
Analysis, Economy
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Latest data released by Destatis – 25 August 2020

  • Non-seasonally adjusted GDP -11.3% vs -11.7% y/y prelim
  • Working day adjusted GDP -11.3% vs -11.7% y/y prelim
  • Private consumption -10.9% vs -9.8% q/q expected
  • Prior -3.2%; revised to -2.5%
  • Government spending +1.5% vs +1.5% q/q expected
  • Prior +0.2%; revised to +0.6%
  • Capital investment -7.9% vs -12.2% q/q expected
  • Prior -0.2%; revised to -0.5%
Slight delay in the release by the source. The preliminary report can be found here.
The German economy shrank by slightly less than initially estimated, but it still is the biggest quarterly contraction on record amid the fallout from lockdown measures and the virus outbreak in general from April to June.
There was a heavy drag on consumption/spending but that is largely unsurprising and that contributed to the sharp decline in economic activity seen last quarter.

Big German banks warn against further rate cuts (expected from the ECB this week)

  
  Analysis
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Both Deutsche and Commerzbank Banks have weighed in against forecast further cuts from the European Central Bank this week:

  • would benefit those with assets
  • further burdening savers.
  • neither sustainable, nor responsible
The central bank is expected to cut as [part of measure to support the Eurozone economy. As an example of the slowing of the EZ economy was the data from Germany last week:
  • Germany July industrial production -0.6% vs +0.4% m/m expected
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European Central Bank policy meeting is on September 12,
Its an amusement to debate who wins, who loses, and what the ECB should of should not do. Nothing wrong with that. Its also of more direct to use to traders to debate will the ECB will or will not do. I’ll have previews of what to expect upon approach to the meeting, but for now, here is something for EUR bulls and bears:
  • EUR/USD to stay weak, ECB next week
  • Risk for EUR is positive for next week’s ECB meeting – BAML
Both Deutsche and Commerzbank Banks have weighed in against forecast further cuts from the European Central Bank this week:
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