THE TAKEAWAY: EU forecasts 0.3% GDP decline in 2013 -> Forecasts match earlier ECB predictions -> Euro declines temporarily
The European Commission cut the Euro-zone gross domestic product forecast for 2013 to -0.3% from a previous forecast of +0.1%. For 2014, the EU kept a growth forecast of 1.4%. The EU further predicted that inflation will be 1.8% in 2013 and 1.5% in 2014. The European Commission further predicted that the Euro-area government deficit will total 95.1% of GDP in 2013, and the joblessness forecast was raised to 12.2% for 2013.
Beyond the number forecasts, the European Commissions sounded a lot like the ECB when talking about an upcoming recovery. The EU said it sees a bottoming out in Europe and economic activity will gradually accelerate. The commission added that it sees growing investor confidence.
The EU cut its German growth forecast to 0.5% in 2013 and predicted French GDP up 0.1%. UK economic growth was forecasted at 0.9% in 2013.
However, the negative growth forecast matches the current ECB predictions for 0.3% GDP decline in 2013 and inflation below 2% in the coming months. That is why the growth forecasts only had a temporary effect on Forex markets. The Euro declined below 1.3200 against the US Dollar in Forex markets, before erasing most of those losses and climbing back to 1.3210. The pair may see resistance by a broken support around 1.3284. Support might be provided at 1.3184, by the first support given by the monthly pivot indicator.
EURUSD Daily: February 22, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .