Euro rises after eurozone GDP, yet gains limited as Greece falls back into recession

Euro rises after eurozone GDP, yet gains limited as Greece falls back into recession

euro_dollar_quantitative_easing_creditdennis_skley_flikrThe euro rose for a second straight session after a report showing euro area growth quickened in the first quarter, yet gains were limited as Greece relapsed into recession.

Euro-area growth rose 0.4 percent in the three months through March from 0.3 percent in the last quarter of 2014, according to the preliminary reading released on Wednesday.

The GDP reading for the 19-nation region was boosted by strong French and Italian growth figures, which offset the weaker momentum in Germany.

For sure, the euro area has took advantage of the weak euro, which plunged more than 11 percent versus the green currency in the first quarter.

However, the gains were limited after the debt-stricken Greece posted a 0.2 percent contraction in the first quarter.

Now, the Greek economy is officially in recession as it shark 0.4 percent in the fourth quarter of 2014.

The European single currency gained some momentum on Tuesday with the rise in German bond yields and the repay of 750 million euros by Greece to the IMF.

However, the euro may come under pressure again, as European officials have not reached a deal with the current Greek government yet.

Greece aims to unlock the payment of the remaining €7.2bn to repay debt maturing the coming months, noting that it owes the IMF a total of €9.7bn this year.

Despite the repay of the IMF interest payment, Greek finance minister said the current cash could only meet the country’s financial commitments for a “couple of weeks.”

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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