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Forex - EUR/USD weakens on poor eurozone growth rates

ForexFeb 14, 2013 12:10PM ET
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Investing.com - Weaker-than-expected E.U. economic growth figures sent investors ditching the euro and scrambling for safe-haven dollar positions on Thursday after official data revealed the continent's recession grew deeper.

In U.S. trading, EUR/USD was down 0.88% at 1.3334, up from a session low of 1.3316 and off from a high of 1.3456.

The pair was likely to find support at 1.3265, the low from Jan. 23, and resistance at 1.3520, Wednesday's high.

European gross domestic product growth rates served as the pair's chief steering current on Thursday.

Eurostat, the statistical arm of the European Union, reported earlier that the eurozone's GDP contracted by 0.6% in the fourth quarter of 2012 from the third, well beyond expectations for a 0.4% decline and far surpassing g the previous 0.1% quarterly contraction.

The dip in total output represented the fastest rate of decline since 2009 and marked a third consecutive quarter of contraction.

The annualized GDP rate fell 0.9%, worse than expectations for a 0.7% contraction, after shrinking at an annualized rate of 0.6% in the previous quarter.

Quarterly French, German and Italian data painted similar pictures.
Germany’s economy, the eurozone’s largest, contracted by 0.6% in the in the fourth quarter, more than an expected 0.5% drop on declining exports and investment.

France’s economy also contracted more than forecast, with GDP contracting by a quarterly 0.3%, while Italy’s economy contracted by 0.9%. Portugal was home to the worst performing economy in the region, with quarterly GDP contracting 1.8%.

Meanwhile in the U.S., the Department of Labor reported earlier that the number of people filing for initial unemployment assistance last week fell by 27,000 to 341,000, better than market calls for a decline of 8,000 to 360,000.

Jobless claims for the preceding week were revised up to 368,000 from a previously reported gain of 366,000.

The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.64% at 0.8601, and EUR/JPY trading down 1.19% at 124.17.

In Tokyo earlier, the Bank of Japan kept monetary policy and interest rates unchanged in a widely expected decision.

The Bank of Japan also refrained from expanding its stimulus program.

On Friday, investors will pay attention to a G20 meeting of finance ministers after recent concerns have grown that Japan could come under pressure following the yen's recent steep decline.

Also on Friday, the eurozone will publish data on its trade balance, while Spain is to hold an auction of 10-year government bonds.

The U.S. is to round up the week with data on manufacturing activity in New York state and industrial production, while the University of Michigan is to release preliminary data on consumer sentiment and inflation expectations.

Forex - EUR/USD weakens on poor eurozone growth rates

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