News Column

Euro Falls As Eurozone GDP Grew Less-than-forecast

May 15, 2014

CANBERA (Alliance News) - The euro declined against the other major currencies in the European session on Thursday, as Eurozone economic growth slowed more-than-forecast in the first quarter, raising bets for stimulus measures from the European Central Bank.

The Eurozone economy grew less than expected in the first quarter, flash estimates revealed today.

Seasonally adjusted GDP grew only 0.2% sequentially, the same rate as seen in the fourth quarter, Eurostat reported. Economists had forecast the rate to double to 0.4%.

On a yearly basis, the economy expanded at a faster pace of 0.9% after rising 0.5%. Nonetheless, it was weaker than the consensus forecast for 1.1% growth.

Inflation in Eurozone was confirmed at 0.7% in April, separate data showed. It rose from a 52-month low of 0.5% in March.

Monthly inflation came in at 0.2%.

Inflation held below the European Central Bank's target of 'below, but close to 2%' for the fifteenth consecutive month.

Meanwhile, German economic growth doubled in the first quarter as mild weather boosted demand, while France stagnated on subdued spending and exports.

Germany's quarterly GDP growth doubled to 0.8% in the first quarter from 0.4% in the previous quarter, Destatis said.

ECB Vice President Vitor Constancio said a speech in Berlin today that the central bank was open to more monetary easing to prevent the euro zone from low inflation over an extended period and was determined to act swiftly if required.

The euro retreated to 139.14 against the yen, from an early high of 139.87. The pair closed yesterday's deals at 139.74. If the euro extends its downtrend, it is likely to find support around the 138.73 area.

Against the pound, the euro fell to 0.8146, from an early multi-day high of 0.8183. The pair ended yesterday's deals at 0.8179. The euro is likely to find support around the 0.80 area.

Against the US and NZ dollars, the euro fell to a mutli-month low of 1.3654 and nearly a 1-year low of 1.5751, from early highs of 1.3724 and 1.5856, respectively. The euro closed yesterday's deals at 1.3714 against the greenback and 1.5823against the kiwi. If the euro extends its downtrend, it is likely to find support around the 1.36 against the greenback and 1.56 against the kiwi.

The euro fell back to 1.4838 against the loonie, from its early multi- month low of 1.4834. This may be compared to an early high of 1.4940. At yesterday's close, the pair was worth 1.4934. The euro may possibly find support around the 1.47 area.

The euro fell back to 1.4566 against the Australian dollar, heading to violate its early multi-month low of 1.4565 to the downside. This may be compared to an early multi-day high of 1.4657. The pair closed yesterday's deals at 1.4625. If the euro extends its downtrend, it is likely to find support around the 1.44 area.

Looking ahead, the US CPI and industrial production for April, weekly jobless claims for the week ended May 10 and NAHB housing market index for May and Canadian manufacturing sales and existing home sales report for April are likely to influence trading in the New York session.

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Source: Alliance News

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