RTTNews - The euro dropped versus other majors Friday in New York as gross domestic product data revealed the Eurozone saw its biggest economic contraction since 1995. Annual inflation stood at historic low, as price pressures stay tilted to the downside amid slowing economic activity.
The euro moved lower amid choppy trading versus the dollar and hit a weekly low of 1.3510. Earlier this week, the single currency had hit a seven-week high of 1.3721.
The U.S. Labor Department said its consumer price index was unchanged in April after edging down by an unrevised 0.1 percent in March. The lack of growth in consumer prices came in line with the expectations of economists.
At the same time, the report showed that the core consumer price index, which excludes food and energy prices, rose 0.3 percent in April after rising 0.2 percent in each of the three previous months. Economists had expected core prices to edge up 0.1 percent.
The euro slipped to an eight-day low of 0.8878 versus the British pound. The drop took the single currency away from the weekly high of 0.9036 reached on Monday.
The European currency dropped to a 2 1/2-week low of 128.18 against the yen. The euro has been been trending lower throughout the week.
On the economic front Friday, flash estimate released by Eurostat, the Statistical Office of the European Communities said the euro area GDP declined 2.5% sequentially in the first quarter of 2009 compared to a 1.6% decline in the fourth quarter. Economists were looking for a 2% fall in the first quarter. The first quarter decline was the largest since 1995.
GDP contracted a seasonally adjusted 4.6% compared with the first quarter of 2008, much larger than the 1.4% decrease seen in the last quarter of 2008. The decline was steeper than the expected drop of 4.1%.
Germany's gross domestic product, or GDP, fell 3.8% quarter-on-quarter in the first three months of the year after falling revised 2.2% in the fourth quarter of 2008. Meanwhile, economists had forecast a 3% fall. The biggest Eurozone economy contracted for the fourth straight quarter, with the first quarter marking the biggest quarterly fall since records began in 1970.
The French economy contracted 1.2% in the first quarter from the fourth quarter, the statistical office INSEE said today. It follows a revised 1.5% contraction in the fourth quarter and a 0.2% fall in the third quarter. Meanwhile, the economy was expected to shrink 1.3% in the first three months of this year. On an annual basis, the economy contracted 3.2%, while the forecast was for a 2.5% decline.
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