Euro Weakens After Revised GDP Report

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The euro saw slight weakness against major rivals on Wednesday in New York as data showed the Eurozone economy contracted more than initially estimated in the second quarter, leading to speculation the European Central Bank will maintain economic stimulus.

Eurozone gross domestic product fell 0.2% sequentially in the second quarter, a downward revision from the 0.1% decline estimated previously, data released by the Eurostat showed Wednesday. Economists had forecast the final figure to match the initial estimate.

GDP continued the stretch of fall that began in the second quarter of 2008. In the first quarter, the economy had shrunk 2.5%.

Global stocks also saw slight weakness, reducing risk appeal. The euro often rises along with stocks in trading against lower-yielding currencies.

The euro backed off of 12-day high against the dollar, falling near 1.4670. The European currency reached as high as 1.4761 yesterday after the Reserve Bank of Australia boosted its interest rates, fueling hopes of a speedier economic recovery.

There was no major economic news on the docket in the U.S. Traders focused on the unofficial start of earnings season after the close of the U.S. markets today.

The euro slipped off of 10-day high against the British pound. The 16-member currency moved near 0.9225 after reaching as high as 0.9275 yesterday.

Survey data released by the Nationwide Building Society showed Wednesday that the consumer confidence index rose to 71 from 65 in August. The present situation index rose to 19 from 17, while the expectations index climbed by nine points to 106.

The euro was choppy against the Japanese yen, moving near its overnight levels at 130.30 in the early afternoon.

Japan's leading index climbed to 83.3 in August from 82.5 in the previous month, the Cabinet Office said Wednesday. The indicator came in line with economists' expectations. The leading index has been rising now for six consecutive months.

Also in the Eurozone, according to Federal Ministry of Economics and Technology, German factory orders increased 1.4% in August from the previous month, while the expected growth was 1.1%. But, the monthly growth rate was smaller than the revised 3.1% increase seen in July.

(Market News Provided by RTTNews)