Eurozone GDP data in focus (video)
Currencies Direct February 13th 2015 - 2 minute read

Today Eurozone GDP figures will dominate the economic calendar during European trading hours. The euro strengthened this morning as a result of impressive growth recorded in Germany in Q4 2014. GDP increased by 0.7% in the last quarter of 2014, which is twice as strong as economists anticipated. This should bode well for growth in the single currency area.
Eurozone output is expected to expand by 0.2%, keeping the year-on-year growth rate steady at 0.8%. This is the first instance for some time that the Eurozone area has outperformed market expectations, and could be a sign that analysts have overestimated the economic malaise in the Eurozone. If the news flow continues to surprise to the upside, the euro might be due a slight correction. However, any euro upside will be limited; the longer term outlook remains bearish as the ECB prepares to launch its quantitative easing programme next month.
In other news from the Eurozone yesterday, the Eurogroup meeting to discuss Greek debt was inconclusive and no deal was reached between the EU and Greece. Despite this, the euro rallied as traders were relieved to find out that the European Central Bank extended an emergency €5 billion loan to Greece to avoid any funding problems. The ceasefire between Russia and the Ukraine, brokered by German Chancellor Angela Merkel and the French President Francois Hollande, has also helped market sentiment as the on-going uncertainty was damaging to the region.
In the UK, the pound soared after a hawkish Bank of England quarterly report. The BoE lowered its 2015 inflation forecast to 0.5% from 1.4% but it also raised its growth forecast for the next year to 2.9%. Mark Carney also stated that inflation will remain close to zero for much of 2015, although policymakers are committed to raise interest rate in 2015. He also stated that any tightening will be gradual.
In the US, economic data was weaker with consumer spending dropping -0.8% in January. Jobless claims also increased from 279,000 to 304,000. Today the market will focus on February’s University of Michigan report, a measure of US consumer confidence. The index is expected to hold unchanged at 98.1, matching an 11-year high recorded in the previous month.
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