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Forex News: Euro Rises on Surprising Spanish GDP

Forex News: Euro Rises on Surprising Spanish GDP

Benjamin Spier, Technical Strategist

THE TAKEAWAY: Spanish GDP drops by 0.3% in Q3, better than expected -> Better GDP could lower expectations for bailout -> Euro rises

The Spanish economy shrank by 0.3% in the third quarter, marking 4 straight quarters of economic contraction. However the drop in gross domestic product was better than the expected 0.4% decline, as predicted by forex news sources, and better than the previous quarter’s 0.4% drop in GDP. The third quarter saw a 1.6% drop in GDP from Q3 of 2011, according to National Statistics Institute.

Spain is said to be considering a bailout from the EU via the ESM bailout fund, but has thus far resisted asking for the aid. An improving economy could lower our expectations for a Spanish bailout request.

In forex markets, the Euro climbed on the positive economic news, despite its effect on bailout expectations, rising close to 1.2950 against the US Dollar. EURUSD has since erased those gains following disappointing German employment data. Support could be provided by a rising month-long trend line which is currently near 1.2843.

EURUSD 15-minute: October 30, 2012

Euro_Rises_on_Surprising_Spanish_GDP_body_eurusd_daily_chart.png, Forex News: Euro Rises on Surprising Spanish GDP

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.