Eurozone Growth Looks Patchy In Second Quarter
The euro recovered some ground on Wednesday after declining US Treasury yields took the dollar lower.
The common currency traded at $1.3707 at 6:20 GMT on Wednesday morning after New York Federal Reserve President William Dudley remarked on Tuesday that the Fed would likely take its time raising its key interest rate, which in turn weighed on the dollar.
The euro has been struggling since May’s European Central Bank meeting at which ECB President Mario Draghi said the bank was comfortable making a policy move in June.
Most see the bank lowering its key interest rates as well as taking the deposit rate below zero at next month’s meeting as the region’s low inflation and lackluster economic data suggest its recovery is sputtering.
It seems that even Germany is feeling the pressure despite the nation’s resilience throughout the eurozone’s three year crisis. The Wall Street Journal reported that the Bundesbank published a report on Monday which indicated that the German economy is expected to grow at a slower pace over the next few months.
The bank noted that external disruptions are likely in the near term as emerging markets present considerable risks and the conflict in Eastern Europe threatens to escalate.
On Tuesday, Spain’s finance minister was more optimistic, saying that the Spanish economy is likely to continue growing in the second quarter at a similar rate to the first.
While that is good news, early indicators show that Germany and Spain are the bloc’s only large economies with healthy growth rates.
Moving forward, investors will be keeping an eye on European parliamentary elections as the region’s jaded voters could upset the balance by voting in protest for anti-austerity, euroskeptic parties.
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