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15 May 2013
Forex Flash: Gradual Euro weakness against USD could accelerate - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that gradual Euro weakness against USD could accelerate in the near-term if key support is broken at around the 1.2800-level.
He feels that the release of weaker than expected Q1 GDP reports from both France and Germany today are also weighing upon the euro. Further, the preliminary GDP report for Germany revealed that the economy expanded by just 0.1% in Q1 which followed a downwardly revised contraction of -0.7% in Q4 2012. Additionally, the preliminary GDP report for France also revealed that the economy contracted by more than expected in Q1 by -0.2% although that followed an upwardly revised contraction of -0.2% in Q4 2012.
As a result, he notes that the pace contraction for the euro-zone economy in Q1 is likely to prove greater than current consensus expectations of -0.1% and looking ahead leading indicators are signalling that the euro-zone economy will likely contract again by a similar pace in Q2. Hardman writes, “The pound also appears to have completed its recent corrective rebound with GBP/USD heading back towards the 1.50-level. The release of the final BoE Quarterly Inflation Report under Governor King’s leadership is expected to reveal a modestly more dovish bias with lower commodity prices likely to lower inflation projections leaving more scope for easing ahead if required to support growth.”
He feels that the release of weaker than expected Q1 GDP reports from both France and Germany today are also weighing upon the euro. Further, the preliminary GDP report for Germany revealed that the economy expanded by just 0.1% in Q1 which followed a downwardly revised contraction of -0.7% in Q4 2012. Additionally, the preliminary GDP report for France also revealed that the economy contracted by more than expected in Q1 by -0.2% although that followed an upwardly revised contraction of -0.2% in Q4 2012.
As a result, he notes that the pace contraction for the euro-zone economy in Q1 is likely to prove greater than current consensus expectations of -0.1% and looking ahead leading indicators are signalling that the euro-zone economy will likely contract again by a similar pace in Q2. Hardman writes, “The pound also appears to have completed its recent corrective rebound with GBP/USD heading back towards the 1.50-level. The release of the final BoE Quarterly Inflation Report under Governor King’s leadership is expected to reveal a modestly more dovish bias with lower commodity prices likely to lower inflation projections leaving more scope for easing ahead if required to support growth.”