The European Commission released its official growth forecast today, and although the official estimate of Q1 GDP won’t be released until April 15, the commission already downgraded its forecast of Euro-zone growth to -0.4% for 2013 from a previous estimate of -0.3%. Furthermore, the European Union’s report forecasted 1.2% growth in 2014.
The German economy, the biggest one in the Euro-zone, is forecasted to grow 0.4% in 2013 and 1.8% 2014. Meanwhile, the EU cut the UK economic growth forecast to 0.6% in 2013, down from a previous forecast of 0.9%. The downgrade to the EU forecast follows the recently reported better than expected 0.3% GDP growth in Q1.
Furthermore, the UK was the sources of the only significant economic release during the European session. The UK PMI for services rose to an eight month high of 52.9 in April, and Markit wrote that the better than expected increase in services activity alleviates pressure on the BOE to add to stimulus.
The Euro received a bit of a boost today when ECB member Nowotny said the markets overreacted to talk of a negative interest rate, and that he sees no negative deposit rate in the immediate future. EUR/USD jumped about fifty points and above 1.3100 on the comments.
Finally, the ECB announced that 0.62 billion Euros of the 2 3-year LTRO loans will be repaid in the upcoming week. The payment is down from 2.3 billion Euros paid this past week.
The Euro continues to trade above 1.3100 against the US Dollar in Forex markets. Resistance might next be seen at 1.3242, by a 2-month high set in recent trading. Support might come in by the key 1.3000 figure.
In the North American session, further volatility might be seen surrounding the change in NFP payrolls in the US. See an preview of the employment release here.
(Did you understand all the terms used in today’s report? If so, test your skills with DailyFX’s Trading IQ Quiz.)
EURUSD Daily: May 3, 2013
Chart created by Benjamin Spier using Marketscope 2.0
--- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .