THE TAKEAWAY: Euro-zone GDP drops 0.1% in Q3 according to second estimate -> Economy confirmed in a technical recession -> Euro trading higher ahead of ECB meeting
The Euro-zone was confirmed to have fallen into a technical recession according to the second preliminary estimate of the third quarter gross domestic product. Eurostat reported that the economy contracted 0.1% over the quarter, and the economy was 0.6% lower than Q3 of 2011, unchanged from an earlier estimate.
Household consumption was unchanged in Q3, and exports rose by 0.9%. Out of the countries that have already reported their GDP, Estonia saw the largest expansion in Q3, as its GDP was up 1.7%; the Netherlands saw a 1.1% decline.
The European economy has been suffering because of the debt crisis, and Euro investors are wary of another economic contraction in Q4. Based on some recent Purchasing Managers’ Index results, the chance of economic expansion are not great.
The Euro did not significantly react in forex markets to the in-line GDP estimates. EURUSD is trading slightly higher in today’s session ahead of the ECB interest rate announcement, and resistance might be found by a 2.5-month high at 1.3139.
EURUSD Daily: December 6, 2012