BLBG:Euro Rebounds After German GDP Beats Estimates
The euro rebounded from the lowest level in almost four months after data showed Germany’s economy grew five times more than analysts predicted, easing concern that Europe’s debt crisis is weighing on growth.
The 17-nation currency earlier weakened against the dollar and yen amid mounting doubts that Greece can avoid an exit from the euro bloc as European finance ministers meet for a second day in Brussels. Greece’s president will call a meeting of leaders of all parliamentary parties except for an ultra- nationalist party today to make the case for a government of prominent non-politicians. Demand for the dollar was also limited before the Federal Reserve releases minutes tomorrow of its most recent policy meeting.
“The fact that the euro zone’s biggest economy is going strong is positive, so we’re seeing some buying of the euro,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “There is a bit of short-covering, but interest is still to sell on rallies.” Short-covering is the purchase of a security in order to close out a short position, a bet that an asset will fall.
The euro rose 0.2 percent to $1.2847 as of 7:32 a.m. in London. It earlier slid as low as $1.2814, the weakest since Jan. 18. The shared currency gained 0.2 percent to 102.61 yen from yesterday, when it touched 102.23, the lowest since Feb. 16. The yen traded at 79.88 per dollar from 79.85.
In Germany, gross domestic product rose 0.5 percent in the first quarter from the previous three-month period, when it fell 0.2 percent, the Federal Statistics Office said in Wiesbaden today. Economists predicted a 0.1 percent gain, according to the median of 40 estimates in a Bloomberg News survey.
Greek Talks
Alexis Tsipras, who heads Greece’s anti-bailout Syriza party and rejected a unity government following last week’s inconclusive election, boycotted yesterday’s meeting called by President Karolos Papoulias. Tsipras will attend today’s meeting, state-run NET TV reported. Greece may face new national elections unless a government is formed.
Luxembourg Prime Minister Jean-Claude Juncker said only a “fully functioning” Greek government would be entitled to tinker with the conditions attached to 240 billion euros ($308 billion) of rescue aid.
“The government would have to stand by the program,” Juncker told reporters after chairing a meeting of euro-area finance ministers in Brussels late yesterday.
‘A Selling Opportunity’
“Looking at the fundamentals and at the developments in Europe, it’s all very bearish for the euro,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The euro’s going to go down. Any rally from here will be a selling opportunity.”
Europe’s shared currency dropped 4 percent in the past six months, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 1.8 percent, and the yen lost 2.2 percent.
The Fed will release the minutes from its April 25 gathering tomorrow. Chairman Ben S. Bernanke said after the meeting that he’s prepared to “do more” to boost the economic recovery and ensure that inflation remains close to target.
The U.S. consumer-price index probably rose 2.3 percent in April from a year earlier, according to the median estimate in a Bloomberg poll of economists before the data is released today. That would be down from the 2.7 percent rate recorded in March.
“The economy is certainly not weak enough to suggest they need to move towards more quantitative easing at this point,” said RBS’s Gibbs. “It’s still on the table and will still come out in the minutes.”
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
