Although recent data showed that German business confidence had risen for the first time since February, other pieces of economic news have not been so positive.
The largest economy in the Eurozone expanded by just 0.1 per cent in the first quarter of this year, retail sales unexpectedly declined in April and services PMI dipped to 49.7 in May.
And although the nation’s unemployment rate remains close to a 20-year low, unemployment increased by 21,000 last month.
Now the German central bank has cut its growth forecasts for Germany, for both this year and 2014.
Bundesbank now expects the nation to post economic growth of 0.3 per cent this year, rather than the 0.4 per cent initially expected, with growth in 2014 dropping from a previously estimated 1.9 per cent to 1.5 per cent.
Despite this action the central bank intimated that it felt that the worst of the fiscal crisis in the Eurozone is now over.
Bundesbank President Jens Weidmann issued the following statement: ‘Much will depend on whether the economic situation stabilizes in the Euro-area crisis countries and whether expansionary forces will gradually gain the upper hand there. A sustained upturn in the world economy is just as important as a precondition for the growth path we have assumed. [In the Eurozone] the economy appears to be bottoming out.’
However, Weidmann did caution that the Bundesbank sees ‘continuing structural problems as standing in the way of a rapid improvement.’
Despite this news the Euro continues to trade strongly against the US Dollar after achieving over 1.32 overnight.
While German industrial production figures could inspire modest Euro movement, all eyes will be drawn to the US non-farm payrolls report. Significant volatility can be expected to follow its publication at 13:30 GMT.
Euro (EUR) Exchange Rates As of 09:00 –
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3249 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8503 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.3910 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6522 >
