Euro Rises on Strong Eurozone GDP

NEW YORK (TheStreet) -- The U.S. dollar was mixed against the majors and has given back some of its recent gains against the euro Friday after robust first-quarter gross domestic product releases from France and Germany boosted overall eurozone GDP.

The euro traded back near $1.43 following the reports, while sterling, after receiving an initial boost from the rise in the euro, ran out of steam after reaching just beyond $1.63. The dollar was firmer against the Swiss franc as has been the trend over the last week, while the dollar remains soft against the yen heading into the North American session.

Asian equities were lower after another choppy session on Wall Street, although Chinese stocks gained 1%, their biggest gain in a month, on analyst reports of limited further rate hikes. European stocks are mixed, having given back earlier gains, despite the good data.

Oil prices and other commodities were moving higher, with crude retesting the $100 level and copper rising by 1.5%.

Bond yields rose about 1 basis point across the curve in both the U.S. and Germany, leaving the two-year U.S. to German spread unchanged on the day. Two-year periphery spreads have fallen 30 basis points for Greece, 5 basis points for Portugal and are narrowly higher with Ireland.

The eurozone's GDPs were mostly stronger, adding pressure on the European Central Bank to continue rate normalization. This data highlights that the key driver for the EUR/USD, the divergent policy outlook between the Federal Reserve and the ECB, will remain in place.

Overall eurozone GDP accelerated more than expected, to 0.8% quarter over quarter from 0.3% quarter over quarter in the fourth quarter. The acceleration was driven by 1.5% growth in Germany and 1.0% growth in France, while Spain and Greece both also released positive GDP figures, with Greece reporting the first positive GDP since 2009.

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