Eurozone GDP In Question After Poor German Data

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The euro made its way above $1.36 on Tuesday after suffering losses on Monday due to weak German data and a rising dollar. The common currency traded at $1.3606 at 5:53 GMT, recovering as the dollar’s jobs-report fueled upward momentum faded.

It's unclear how high the euro can go, however, as worries that the eurozone GDP will be weaker than originally forecast are mounting. Monday data showed that industrial production in Germany--the bloc’s largest economy--unexpectedly fell 1.8 percent. The Wall Street Journal reported that many economists are scaling back their estimations for Germany’s second quarter GDP to just 0.1 percent.

Related Link: Euro Falls On Poor German Data

If the GDP estimates prove true, the bloc as a whole will likely struggle to expand. Germany has long been the steam engine for the eurozone economy, pulling its neighbors through the difficult financial crisis. In the first quarter, the bloc’s economy expanded by 0.8 percent, but if Germany’s growth was excluded, the region would have seen a contraction.

If data from the eurozone continues to come in lower than expectations, the European Central Bank could be pushed to ease further in the coming months.

The bank announced a series of easing measures at its June meeting, but many believe the bank’s course of action wasn’t aggressive enough to tackle the region’s failing recovery and dropping inflation. If the bloc’s economy continues to decline, many expect to see the ECB implement a large scale quantitative easing program similar to that seen in the U.S.>

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