The euro was observed to strengthen slightly after the release of the Eurozone Gross Domestic Product (GDP) data, but was still burdened with a variety of negative sentiments. The euro was observed to strengthen slightly after the release of Eurozone Gross Domestic Product (GDP) data on Thursday (14 / February), but actually still burdened by a variety of negative sentiments.
About 30 minutes after the release of the data, EUR/USD has slipped from a record daily high at the level of 1.1282 to around 1.1271. In the daily chart, the currency pair is still near the lowest range since December, after yesterday had fallen due to poor industrial production data and the eruption of the Spanish political crisis.
Germany Stagnant, Italy Recession
In the preliminary report, Eurostat reported that Eurozone GDP recorded growth of 0.2 percent (quarter-over-quarter) in the IV/2018 quarter, exactly the same as the previous period and market estimates. Annual GDP also stagnated at the level of 1.2 percent, according to expectations.
At first glance, the news was good news, because market participants were worried that the data would miss. However, this data does not actually show satisfactory economic performance. In particular, the GDP data reveals the fact that even though the German economy is not following in the footsteps of Italy which is sinking into recession, its condition is trapped in stagnation.
Similar to Japanese Conditions, Plus Political Crisis
Bloomberg Economics' review released a few hours before the publication of GDP data, said that the Eurozone economy now resembles the stagnation that has hit Japan since 20 years ago and continues until now. The results of the research were obtained after the research team compared the percentage data on the comparison of household and corporate debt with GDP in Japan, the United Kingdom, the United States, the Euro Zone, and China.
A number of other headlines on Wednesday also still tend to fundamentally suppress the Euro. Eurozone industrial production data slid 0.9 percent (month-over-month) in January, recording a decline of 4.2 percent on a year-on-year basis. Meanwhile, political uncertainty spread in Spain, the fourth largest economy in the region.
On Wednesday night, the Spanish Parliament rejected the 2019 state budget plan, so it was feared that it would trigger early elections. The failure to pass the budget was linked to another political crisis, as Catalan separatists turned against the government of Prime Minister Pedro Sanchez.
EU Commission Cut Growth Projection, Euro Weakens
The European Union Commission cut the Eurozone economic growth forecast significantly for 2019 and 2020, in the trading session this Thursday (07/February). The prediction was taken based on the projections of global and internal slowdown of member countries. This announcement is almost the same as BoE which took a similar policy.
Eurozone growth is predicted to slow to 1.3 percent in 2019, from 1.9 percent in 2018. For 2020, growth is expected to rise again to 1.6 percent. Even though in November 2018, the growth of the Eurozone for 2019 is expected to grow 1.9 percent, and for 2020 it is projected to reach 1.7 percent.
The warming of global trade and China's economic slowdown are mentioned as the culprit of the decline in the EU economy. In his press conference today, Commissioner of the European Union Commission, Pierre Moscovici, explained that in addition to these external factors, the European Union Commission did not dismiss if internal factors also contributed to bad report cards.
The significant slowdown experienced by developed countries in the region cannot be underestimated. Just say, German automotive production has slowed significantly, social tensions in France (Yellow Vest), and Italian budgets that have not found a meeting point. Learn forex more through a reputable broker like Didimax, with free classes where you can learn forex even more.
