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Euro-area GDP Drops On Weak Investments And Imports

Published 12/31/2000, 07:00 PM
Updated 12/04/2008, 05:22 AM

Release Explanation: It measures the monetary value of all goods and services produced within a Country’s borders in a specific time period. GDP is calculated on an annual basis, is the broadest measure of activity, and the primary gauge of each economy’s overall health. It includes all Company and Personal consumption, government outlays, investments, and exports less imports, that occur within a defined territory.

Trade Desk Thoughts: The report shows that third quarter Euro-area GDP contracted 0.2% for the second straight quarter. The released number was in-line with market expectations. Compared with the third quarter of 2007, the Euro-area GDP grew by 0.6%. Investments fell by 0.6% in the third quarter, while household consumption remained unchanged. Analyzing the trade balance components, exports grew by 0.4%, while imports rose by 1.7% in the third quarter of 2008.

The ECB has announced on several occasions that the Euro-area will have weak GDP growth in the second and third quarters, but now it seems the following quarter will be very weak also. This is the first recession the Euro-area has experienced since the formation, back in 1999.

Forex Technical Reaction: The market had a weak reaction to the GDP report, since this was a confirmation of the numbers released a few weeks ago. During the overnight session, the euro dropped as much as 170 pips, testing the 1.2550 support area, but has since pared some of those losses

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