Fundamental Comment

Euro remains firm despite dismal economic data

Euro remains firm despite dismal economic data

The euro held its gains despite the release of weak economic data from the euro zone, returning to the rise today against the dollar after hitting a four-week high during yesterday’s trading session.

The EURUSD pair hit today's high at 1.1099 and opened today at 1.1076, while yesterday it recorded the highest level in four weeks at 1.1115.

Data showed that the euro-zone economy grew at a modest pace in the third quarter, as the weakening trade performance, caused by the US-China trade war, and fall in retail sales weighed on the growth.

The 19-nation economy expanded by 0.2 percent in the third quarter, unchanged from the second quarter growth figures.

Retail sales in the euro zone fell in October by 0.6%, the largest drop since the beginning of 2019, from the previous reading 0.2% drop. On the annual level, it rose modestly by 1.4% and the previous reading was 2.6% up.

The data contributed significantly to the negative outlook for the eurozone facing threats and uncertainty about Brexit as well as growing global trade tensions.

The United States has decided to sign the first phase of the trade deal to end its war with China in October, but the two countries are still at odds over details.

Britain was also due to leave the EU at the end of October, but it was extended until the end of January as it did not reach an agreement with the EU for a safe exit.

Germany, the largest economy in the euro zone, and Italy, the third largest, grew by 0.1% in the third quarter, while France, the second largest, grew by 0.3%.

The report also showed that employment growth in the euro zone saw a slowdown in the third quarter to 0.1% from 0.2% in the second quarter. Year-on-year growth slowed to 0.9% from 1.2% previously.

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