Euro slides after GDP report

The euro drifted lower despite better-than-expected growth figures from the eurozone.

The eurozone revealed a 0.3% increase in gross domestic product (GDP) for the second quarter of 2013, compared with the same period last year. Economists had been expecting an increase of just 0.2%. Since the level of economic output increased by 0.3%, this means the eurozone has emerged from its recession. Earlier this morning, Germany and France announced a 0.5% and 0.7% increase in second-quarter GDP respectively, and both these readings were above analysts’ estimates. The growth figure for the region highlights the fact that the southern European countries are dragging down the more prosperous northerly economies.

Last night, Dennis Lockhart of the Federal Reserve stated that the bond-buying programme may not be tapered in the near future. Traders will be paying close attention to what the Fed has to say on this matter, as a reduction in the stimulus could trigger a rally in the US dollar. Tonight, James Bullard of the Fed is speaking at 6.20pm; it is not unusual for the Fed members to contradict each other, so it is possible Mr Bullard could be in favour of tapering in the months to come.

Spot FX EUR/USD chart

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