Market Overview

Euro Above $1.25 Despite Poor GDP Figures

Euro Above $1.25 Despite Poor GDP Figures
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The euro was steady above $1.25 on Monday morning after eurozone data out last week showed that the bloc’s economy grew only modestly in the third quarter. The common currency traded at $1.2523 at 7:50 GMT as investors accepted the eurozone’s meager growth as a positive, since some were worried that the region was headed for a recession.

The Wall Street Journal reported that the eurozone’s GDP increased by 0.6 percent from July to September, a far cry from the bloc’s growth of more than 2 percent before the financial crisis, but growth nonetheless. A lack of domestic demand was the major factor in the bloc’s sluggish growth, as most nations are still struggling with high unemployment which has caused cautious spending.

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Individual eurozone nations had mixed results. France was able to turn around its second quarter contraction and eeked out 0.3 percent growth, though many have attributed this to growing inventories. Greece surprised investors as the nation’s economy grew for the first time since 2008, suggesting that the nation where the crisis started could be getting back on its feet.

Results elsewhere were not as rosy. Italy contracted 0.01 percent in the third quarter as the nation struggled with falling demand and political uncertainty. Germany, normally the bloc’s steam engine, had just 0.1 percent growth.

The figures confirm that the region hasn’t escaped its financial worries just yet as investment in the bloc is not enough to stimulate growth. Many believe that last week’s GDP figures will play a role in December’s European Central Bank meeting as they could be enough to push the bank into adding more stimulus to the economy.

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