Despite a disappointment in GDP numbers for the Eurozone, as well as its economic drivers, i.e. Germany, France and Italy, FX traders shrugged off the news which allowed the common currency to steady early in Asian trade. According to analysts, FX traders has generally been expecting the E.U.’s growth to have stagnated, having gotten that indication from this week’s earlier release of GDP results for Italy and France. Eurozone growth was essentially nil while Germany’s 2nd quarter GDP moved into negative figures; both results were below analysts’ expectations. Personal inflation numbers were also released on Thursday with the pace once again slowing in July, this time from 0.5% to 0.4% year-over-year.
As reported at 11:50 p.m. (JST) in Tokyo, the EUR/USD was trading at $1.3363, recovering from a session low of $1.3348; the pair remains close to a 9-month low and is poised to close the week lower. The EUR/JPY had earlier hit a 1½ week peak at 137.25 Yen, then edged lower to 137.00 Yen. The Euro’s resilience even in the face of the dismal data kept the U.S. Dollar Index from gaining any ground; the Index was trading at 81.617 .DXY, however not far from Wednesday’s 11-month high at 81.716 .DXY.
Speculation Grows on ECB Policy Shift
Given the Eurozone’s recent economic data, traders are once again placing bets on how quickly the European Central Bank might respond with additional stimulus. Earlier this week, the ECB issued its outlook and essentially downgraded growth prospects for the remainder of this year and into next. Though many FX traders are hopeful that the ECB will soon act to prevent the deflationary trend from lengthening, some analysts believe that any additional easing is likely to be modest.