EUR/USD hesitates on slow growth in Europe
Posted on November 13, 2009 by Yohay
Filed Under Forex News | 13 Comments
The Euro zone is out of recession, with another quarter of growth in the large countries and a first quarter of growth for the whole continent. Although these results were expected, EUR/USD reacted positively to this growth.
Germany, the continent’s largest country, was the first to release Gross Domestic Product for the third quarter, at 7:00 GMT. After the surprising growth figures in the second quarter, Germany’s economy expanded at a faster pace, 0.7%.
The initial reaction was somewhat hesitant – economists had expected a growth rate of 0.8%. Still, this is a good figure, and last quarter’s number was revised to the upside – from 0.3% to 0.4%. EUR/USD began climbing slowly. But this was only the beginning.
France, the continent’s second largest economy released its data 50 minutes later. Last quarter’s 0.3% rise was copied to this quarter as well. Economists had expected a faster pace – 0.6%. This caused the move to stall for a few minutes.
Italy: 70 minutes later, at 9:00 GMT, Italy also released its GDP. Also here, the figure missed expectations – growth of 0.6% rather than 0.8%. But the important fact here is that Italy is out of recession. Italy’s economy squeezed by 0.5% last quarter.
The growth of Germany and France was already seen in Q2. Italy’s growth is news. EUR/USD moved up to 1.49 before the release of the all-European Flash GDP.
European Flash GDP rose by 0.4%. The Euro zone is out of recession. On the other hand, tis figure was also less than a 0.6% rise that was estimated by economists. And, last quarter’s GDP contraction was downgraded to 0.2%.
EUR/USD is now trading at 1.4875, falling from 1.49. The hesitant growth isn’t convincing enough.
For more about the Euro’s week, check out the EUR/USD forecast.
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