Germany’s economy grew by 0.5% in Q1 2012. Early expectations stood on a growth rate of 0.1%. Germany’s economy contracted by 0.2% in Q4 2011.
This big surprise sends EUR/USD higher. Perhaps Germany will save the euro-zone from a technical recession? We will know soon.
Euro/dollar found its limits at 1.2850 for now. The shadows from Greece and Spain are still dark. Update: the pair is trying to move above this level, currently very slowly.
Yet this strong figure from Germany may change the picture for the GDP figure for the whole euro-area. Early estimations stand on a contraction of 0.2%, which will officially put the zone in recession – two consecutive quarters of economic contraction.
It may come out flat now.
EUR/USD traded in a narrow range around 1.2830 prior to the release. Europe’s second largest economy, France, released its growth figures beforehand. The French economy stalled in Q1 2012, exactly as expected.
Year-over-year unadjusted growth is at 1.7%, much higher than 0.9% that was predicted.
Germany is Europe’s largest economy. Recent signs have shown that Germany is doing better than the other countries, but it also posted quite a few signs of economic weakness.
The focus is still on Greece, which will see another day of political negotiations, The debt hit country will likely go to elections and eventually leave the euro-zone.
For more on the euro, see the euro to dollar forecast.
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