RTTNews - The euro climbed versus the dollar and was little-changed versus the yen and pound Thursday in New York amid the release of positive gross domestic product data from Germany. The report gave signs the economy could be headed to better days.
The Eurozone economy contracted slightly in the second quarter even as Germany and France emerged out of recession, giving positive signals of an early recovery in the single-currency area from a deep recession.
Later, the European Central Bank in its Monthly Bulletin said economic activity in the euro area over the remainder of this year is expected to remain weak. Looking ahead into next year, after a phase of stabilization, a gradual recovery with positive quarterly growth rates is expected, the latest bulletin for August revealed.
The euro reached a six-day high of 1.4326 against the dollar. The European currency touched as low as 1.4085 earlier in the week after hitting a multi-month high of 1.4446 last week.
A Labor Department report showed that import prices fell 0.7 percent in July following a 2.6 percent increase in prices in June. This marks the first drop in import prices since prices fell 1.3 percent in January. The Labor Department said that export prices edged down 0.3 percent in July after rising 1.0 percent in the previous month.
The euro remained in a trading range near 0.8620 versus the British pound. The pair has struggled to find direction this week.
The 16-nation currency was little-changed versus the Japanese yen amid choppy trading, moving near 136.20. The currency fell to a two-week low of 134.07 earlier in the week.
On the economic front, the flash estimate from the Luxembourg-based Eurostat showed that the euro area shrank 0.1% sequentially in the second quarter. This was much slower than the 2.5% decline seen in the first quarter and an expected 0.5% contraction. But, the gross domestic product continued the stretch of fall that began in the second quarter of 2008. The sequential decline reported in the first quarter was the most since records began in 1995.
Year-on-year, the seasonally adjusted GDP dropped 4.6% compared to first quarter's 4.9% fall. The second quarter decrease was also smaller than the expected 5.1% decline.
Germany unexpectedly expanded 0.3% sequentially in the second quarter, which was the first growth since the first quarter of 2008. Household and government final consumption expenditure and capital formation in construction made positive contributions to the rebound.
Meanwhile, the French economy surprisingly grew 0.3% in the second quarter on higher government spending and global demand, ending four straight quarters of economic contraction.
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