The euro was resilient despite a run of disappointing Eurozone data today which showed the region’s economy stalled in the second quarter of the year. A surprise contraction in Germany and weakness in the French economy dragged overall gross domestic product figures.
The Eurozone was expected to grow by at least 0.1%, a slightly slower rate than a prior 0.2%. The zero growth rate raised concerns about the state of the economic recovery in the 18-nation region, which is likely to be impacted negatively by the Ukraine crisis and the sanctions against Russia, which is a major trading partner for many Eurozone countries.
The euro fell early in the European session to 1.3347 after weaker French and German GDP but then rallied to 1.3396 even as Eurozone GDP and inflation disappointed. It was broad dollar weakness that also helped the euro. The dollar was weakened after US initial jobless claims rose to the highest level in 6 weeks.
The number of Americans filing for jobless claims rose to 311,000 for the week ending August 9 versus 295,000 expected and more than a previous 290,000.
Sterling dropped to a fresh multi-month low of 1.6656 early in the session as it remained under pressure following yesterday’s less hawkish Bank of England comments. Cable attempted a recovery to 1.6695 thanks to dollar weakness after the US jobless claims data. For now cable has found support at its 200-day moving average.
Dollar weakness helped the yen trim earlier losses made after soft Japanese machine orders data. The dollar rally ran out of steam and quickly retraced after climbing to a high of 102.64 in Asia today and fell to a low of 102.30 on the back of disappointing US jobless claims data.