Dollar Steady Vs. Euro with Euro-Zone GDP in Sight
The U.S. dollar held steady against the euro Wednesday ahead of quarterly gross domestic product figures that may show Europe has shut the door on its long-running recession.
The euro EURUSD +0.03% bought $1.3261, little changed from $1.3259 late Tuesday in North America, as the European Union’s Eurostat statistics agency prepared to release its estimate of second-quarter activity in the euro zone.
Analysts polled by The Wall Street Journal expect, on average, growth of 0.2%, marking the first period of expansion since the third quarter of 2011.
Ahead of Eurostat’s report, Germany and France were due to release their own quarterly GDP figures, with growth projections for the countries coming in at 0.6% and 0.1%, respectively, according to FactSet.
Last week, the euro reached seven-week highs near the $1.34 level on improving European data, including a better-than-expected 3.8% jump in German manufacturing orders in June.
Goldman Sachs on Monday raised its forecast for regional growth to 0.2% from a previously expected flat reading.
“The economic recovery across the euro area will likely continue into Q3 and Q4, even if it is unlikely to be very sharp,” wrote Barclays head of European rates strategy Laurent Fransolet in a report Monday.
He said Barclays economists hold an above-consensus growth forecast of 1.3% for euro area GDP next year, “and, more important, expect the euro area to register one of the biggest turnarounds in growth globally between 2013 and 2014.”
More stability in financial markets and reduced policy uncertainty are among the factors that should support the euro zone’s outlook, said Fransolet.
The euro on Monday briefly gained against the greenback after the closely watched German ZEW economic-sentiment indicator hit a five-month high in August. Also Monday, data showed euro-zone industrial output rose in the second quarter, according to Eurostat.
But the dollar regained ground after the U.S. July retail sales report appeared to reinforce the view that the Federal Reserve will start to slow the pace of assets purchases later this year, a move that many analysts say will be supportive for the dollar.
The ICE dollar index DXY -.00% , which tracks the U.S. currency’s movement against six rivals, slipped on Wednesday to 81.749 from 81.772 late Tuesday.
The WSJ Dollar Index XX:BUXX +0.04% , which uses a slightly wider comparison basket, gave up earlier gains to sit unchanged at 74.01.
The dollar USDJPY +0.09% lost ground against the Japanese yen, however, falling to ¥98.06 from ¥98.22 late Tuesday.
The British pound GBPUSD -0.05% hovered around Tuesday’s level at $1.5444. Sterling on Tuesday reached an intraday high of $1.551, according to FactSet data.
The Australian dollar AUDUSD -0.12% also stuck near Tuesday’s level at 90.95 U.S. cents.
Source: Marketwatch
