Eurozone: Resilient data but growth risks weigh on Euro – Rabobank

Rabobank's Senior FX Strategist Jane Foley highlights resilient Eurozone GDP and Purchasing Managers Index data, which beat expectations despite energy price increases and supply disruptions. However, Foley warns that the collapse of the US-Iran agreement, anticipation of additional ECB rate hikes, competition from China, and Germany's loosening labor market could pose significant growth risks.

Eurozone Q2 GDP growth came in at 0.4% quarter-on-quarter, surpassing the 0.2% median expectation. The Eurozone economy appears to have managed the headwinds better than anticipated. Despite higher energy prices and supply issues, including the near closure of the Strait of Hormuz, the Eurozone economy has withstood the challenges.

A growing unemployment rate in Germany and a slowdown in real compensation of employees may result in stagnant consumer spending for the remainder of the year, according to RaboResearch. Euro (EUR) strength may be limited due to these growth risks, particularly via weaker consumer spending.