Eurozone under pressure after GDP decline
Forex Analysis - 16th August 2012
Written by Imran Allana, FX & Commodity Dealer
FOREX MARKET ANALYSIS 16/08/2012
This week’s announcement that EU GDP in the past quarter was -0.2% has indicated that Europe is teetering on the edge of recession. Although the reading was in line with market expectations, it is worse than the previous figure of 0 percent. This does not technically put Europe in a recession, but puts it very close. Europe’s economy has not been in recession since 2009, but its GDP figure has fluctuated in the intervening time. Despite this, the Eurozone has managed to stave off two consecutive quarterly periods of negative growth and, subsequently, a recession.
Although the Eurozone as a whole may be on the verge of a recession, it seems that Germany and France have both experienced an expansion in their economies, as seen from their preliminary GDP q/q figures, with readings of 0.3 percent and 0 percent respectively.
A string of negative data has also been released including the German ZEW economic sentiment and industrial production figures, both showing a negative outlook for the Eurozone of -21.2 and -0.6 percent respectively. These negative readings are adding more pressure to the already pessimistic view in the market which has seen the single currency subject to volatile moves of late. Much of this recent activity has been on the back of comments from ECB president Mario Draghi after he stated that the ECB will be ready to act and do all in its power to stabilise the single currency.
The trend in the market currently seems to be to short the euro, but traders should be wary of any shocks that may come off the back of further announcements from the ECB.
Important note: These technical and research reports are provided to easy-forex as a subscriber of third party providers. They are provided for informative purposes only and in no way can they be considered as a recommendation by easy-forex to you to engage in any trade. Hence, easy-forex shall not be held responsible for any outcome of trading decisions, in regards with these reports or similar reports. You hereby acknowledge that using the information entailed in these reports is at your sole responsibility and you will have no claims with regards to these reports against easy-forex. If you do not agree to this, you are strongly advised not to use these reports.