Forex News: Cut to German Growth Forecast Fails to Scare Euro Traders
The German Economy Ministry is going to have to try a lot harder if it wants to scare Euro traders today.
The ministry cut its growth forecast for 2013 to 0.4% from an earlier estimate of 1%, yet the Euro just kept on rising following the bleak outlook. The ministry also predicted 1.6% growth in 2014 and a rise in unemployment to 7% in 2013 from an average 6.8% in 2012. Reports of the ministry’s cut to forecasted growth were leaked yesterday, which may have been partially responsible for the lack of response to the news.
The Euro climbed back above 1.3300 against the US Dollar following ECB’s Nowotny comments. The central banker said that he is not worried about long term appreciation of the Euro over the US Dollar. Nowotny also said that he sees stabilization in the Euro-zone in Q1, and he added that he doesn’t see inflation. Nowotny’s comments echoed fellow ECB member Praet, who said earlier in the session that the ECB has no exchange rate target.
The positivity was also reflected in a speech by Spain PM Rajoy. Rajoy said that Spanish exports are posting the best results in 40 year and the doubts over the Euro are over.
In today’s economic releases, Euro-zone inflation was confirmed at a two year low in December. Also, Swiss retail sales rose 2.9% year over year in November, slightly less than expected. Neither release had significant effect on price action.
EURUSD continues to trade slightly above 1.3300 in currency markets. A recent 11-month high at 1.3404 could provide resistance, while a broken support line around 1.3284 could provide support.
EURUSD Daily: January 16, 2013
--- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .
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