News Column

Euro Mixed After Eurozone GDP Data

September 5, 2014



BRUSSELS (Alliance News) - The euro showed mixed trading against the other major currencies in the European session on Friday, after data showed that Euro area economy stalled in the second quarter as estimated earlier as investments and inventories declined and state spending eased.

Data from the Eurostat showed that Eurozone gross domestic product remained flat from the first quarter, when the economy expanded 0.2%. That was in line with the initial estimates.

Investments declined 0.3% from the first quarter, deducting 0.1 points from the GDP change. Falling inventories cut 0.2 points from the GDP change. Meanwhile, growth in private consumption and exports added 0.2 points each. Slower growth in public spending contributed nothing to GDP in the second quarter.

In the economic news, German industrial production grew the most since early 2012 in July, exceeding economists' expectations, data from Destatis showed. The seasonally adjusted industrial production increased 1.9% from June, when output grew a revised 0.4%. Economists had forecast production growth of 0.4% following the original 0.3% gain in June.

The euro edged up to 0.7939 against the pound from an early low of 0.7919. If the euro extends its uptrend, it is likely to find resistance around the 0.80 area.

The euro, which ended yesterday's deals at 136.18 against the yen, recovered to 136.32 around 4:55 am ET. This may be compared to an early low of 137.00. The euro is likely to find resistance near the 138.47 region.

Data from the Cabinet Office showed that a leading indicator of economic activity in Japan continued to increase in July, though at a less than expected rate. The leading index rose to 106.5 in July from 105.9 in June, when it had risen for the first time in five months. Economists had expected the index to rise to 107.1.

Against the US dollar, the euro edged up to 1.2956 from an early low of 1.2921. At yesterday's close, the euro was trading at 1.2942 against the greenback. Continuation of bullish trend may lead the euro to a resistance around the 1.32 mark.

Pulling away from an early high of 1.2065 against the Swiss franc, the euro retreated to 1.2056. On the downside, 1.203 is seen as next support level for the euro.

Data from the Federal Statistical Office showed that Switzerland's industrial production grew at a faster rate in the second quarter, which was more-than-double the pace forecast by economists. The working-day adjusted industrial production increased 3.1% year-on-year following 0.6% rise in the first quarter. Economists had forecast a 1.5% growth.

Looking ahead, Canadian and US jobs data for August are due to be released in the New York session.

At 10:00 am ET, Canada Ivey's purchasing managers index or August is due.



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Source: Alliance News


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