The Euro enjoyed a week of mixed fortunes with an out and out resolution to the Turkey issue still in the works. Nevertheless, the euro did manage to post a small weekly gain despite bottoming out at 1.13 during the week. Opening this morning at 1.1428, the Euro looks to have reversed a three-week losing streak although demand for the Euro remains subdued.
The appreciation of the euro looks to have been driven by off-shore forces rather than latent demand for the Euro with the USD falling across the board. The catalyst, in this case, is further trade talks between the US and China which saw risk-sentiment turn positive. Rumors suggest that they are planning a roadmap to put an end to the dispute by November, a decidedly positive outcome according to market pundits. Turkey, however, continues to look problematic for the Europeans although the rhetoric around a contagion effect has been dialed lower. Markets have mostly come to accept that any spill-over effects will be limited in scope.
There were some further encouraging signs for the Euro, however, that did aid in its recovery during the week. Q2 GDP came in better than expected at 0.4% with German GDP, in particular, posting a 0.5% growth. Inflation, however, continues to be a problem with the figure dropping by 0.3% for the union. Overall the releases had minimal effect on the valuation of the euro but painted a picture for investors. Moving forward into the new week, attentions now turn to some minor macroeconomic releases from Germany and developing headlines in the US.