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German Economy Hardly Grows – EUR/USD Falls

According to the Flash release, the German economy grew by only 0.1% in Q1 2013. The euro-zone’s locomotive was expected to return to growth of 0.3% after contracting sharply by 0.7% in Q4 2012 (revised down from 0.6%). Recent signs from Germany have been mixed. While officially Germany has avoided a recession (two consecutive quarters of decline), a growth rate of 0.1% certainly doesn’t put Germany as a real “locomotive” for growth.

EUR/USD was trading around 1.2925 before the publication and fell to a new low of 1.2908 immediately afterwards. Update: the pair extends its fall and is looking to lose 1.29. The next line of support is 1.2880.

The year-over-year grow contraction is 1.4%. The previous year-over-year figure is now 0% (revised down from 0.1% initially reported).

Bad weather takes the blame for weak growth. The German consumer pushed growth higher, against all the other factors.

It lost a bit of ground after the release of the French figures: the French economy squeezed by 0.2%  (according to the initial estimate), a bit worse than 0.2% that was expected, although Q4 was revised to the upside.

Later in the day, the euro-zone’s third largest economy, Italy is expected to show a contraction of 0.4% at 8:00 GMT. The figure for the whole euro-zone is scheduled for 9:00, and is expected to show a squeeze of 0.1% – a third consecutive quarter of contraction, but expectations change according to the disappointing German release.

For more on the euro, see the euro to usd forecast.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.