Euro Zone GDP Was Revised Down to a Fall of 1.5% Unexpectedly...

Daily Forex Fundamentals | Written by ecPulse.com | Apr 07 09 14:15 GMT |

Deeper contraction, the fourth quarter GDP reading was revised down today to -1.6% on the quarter and -1.5% on the year. Based on the available data, the euro area will continue to struggle with their prolonged recession that extended from the prior year to dominate this year’s activity. This is the first recession since the Euro was established; it took ten years to fall in their first collapse, it was not meant to happen but the vast deterioration in the world financial markets and the spillover from United States sub-prime mortgages was the main reason behind this tumbling. Exports fell drastically in the fourth quarter, according to the data released today exports had fallen 6.7% from the third quarter reading -0.3%. Even if the export reading was revised upward to current levels we still see a marked weakness in the levels of worldwide demand on the European goods especially they are becoming more expensive to trade partners such as the United Kingdom. Moreover, the weakness was also obvious in the imports levels, where imports fell 4.7% in the fourth quarter ensuring all projections that domestic demand had weakened heavily after the levels of unemployment rates surged. However, those data are glooming our projections because in the levels of Unemployment rates in the fourth quarter did not reach those elevated levels which means that at that domestic demand was not pressured with the levels of terminated jobs. To ensure that growth of the first quarter will dip to more the current levels we have seen yesterday the euro areas retail sales where it fell 0.6% on the month and 4.0% on the year. The other details in the GDP table clears household spending had fallen 0.3% on the quarter and 0.5% on the year from the prior quarter. The intensification of the credit crisis had dragged growth readings to retract to the current levels, which had resulted in pushing the European Central Bank to reduce their benchmark rates three consecutive times, yet even the rate cuts did not cushion growth levels. Trichet and his committee were obligated top consider wider rate reduction where today we see the zones interest rates at 1.25% a record low according to the ten year history. Where last week the ECB decided to reduce 25 basis points unexpectedly adding that they would consider Non-standard measures in the upcoming meeting open the path for more speculations and fear. Along with those weak data, the European indices fell ahead US earnings later today, Dow Jones euro stoxx fell 1.40% or 30.58 points reaching 2149.15 levels, followed by the French CAC 40 index losing 1.38% or 40.49 points reaching 2888.78 levels and the German lost 1.24% or 53.02 points reaching 4298.82 levels. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk