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The euro saw mixed results against other majors on Thursday morning as government data confirmed the area's economy has first recession since the adoption of Euro. Traders also reacted as the Bank of England's interest rate cut was kept within expectations.
The Eurostat said in its second estimate that the Eurozone economy contracted 0.2% each in the third and second quarter of 2008. This was the first recession since the adoption of Euro. In comparison with the same quarter of the previous year, GDP grew 0.6%, much slower than the 1.4% expansion seen in the second quarter.
The euro edged away from a three-week low against the U.S. dollar, moving close to 1.3800. The single currency fell as low as 1.3311 earlier this week. President-elect Barack Obama put pressure on Congress to pass his economic stimulus package.
The euro fell to its lowest level in more than three weeks against the pound but pared the gains by the end of the morning. The pair moved at 0.9095 after the European currency fell as low as 0.8892. The Euro had climbed to a record 0.9804 early last week.
Thursday's trading took place as the Bank of England slashed the interest rate by 50 basis points, as expected, to record low. Expectations are increasing that the European Central Bank will also cut soon.
The euro fell to its lowest level in nearly three weeks against the yen, dropping to 124.08 in the early morning. In a speech Thursday morning,
In other economic news, German industrial new orders decreased 6% month-on-month in November after falling a revised 6.3% fall in October, the Federal Ministry of Economics and Technology said Thursday. The decline was steeper than the expected fall of 1.9%. The ministry revised October's fall from 6.1% reported initially. Domestic orders decreased 7.6%, while foreign orders fell 4.4% from October.
The Euro area jobless rate rose to 7.8% in November from 7.7% in October, the Eurostat reported Thursday. A year ago, the jobless rate was 7.2%. Economists had expected the rate of 7.8% for November.
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