"The bleak GDP estimate shows just how fragile and hesitant the Eurozone's recovery is -- so much so that it's questionable whether current economic conditions even qualify as a recovery"
- Nicholas Spiro, managing director of Spiro Sovereign Strategy
What about another sharp drop of the Euro? After another set of disappointing data from the Eurozone, the single currency plunged, moving closer to 1.34, and in case it is breached, a retest of recent low around 1.3389 could be expected. The main reason why investors are selling euros once again, is the fact Eurozone economy barely expanded in the third quarter, adding to concerns the region faces a period of stagnation, weak inflationary pressure and record-high unemployment, that is likely to hold back activity in the nearest future.
On Thursday the European statistical office Eurostat said the 17-nation economy posted a modest growth of 0.1% in the three months through September, cooling from a 0.3% growth in the previous quarter. Analysts, however, expected a 0.2% growth. Moreover, one of the major concerns is that the pace of growth of Europe's biggest economy eased to 0.3% from 0.7% registered a quarter earlier. In addition to that, Italy and France posted negative growth, both contracting 0.1%. As to the broader European Union, the economy expanded 0.2%. Despite worrying signs, some of southern economies are showing signs they are slowly emerging from a deep slowdown. Hence, Spain and Portugal each posted modest gains. Nevertheless, though the Eurozone is no longer in recession, most of economic indicators are still pointing at a severe downturn.
© Dukascopy Bank SA