According to the final release of Q2 GDP for the Euro-zone, the economy contracted more than previously anticipated at a rate of -0.2 percent from the previous quarter and at a rate of -2.5 percent from the previous year. The revisions were due to a combination of weaker than expected housing spending (+0.1 percent from +0.2 percent), investment (-1.5 percent from -1.3 percent), and exports (-1.5 percent from -1.1 percent). The euro was ultimately one of the weakest currencies of the day, rising only against the Swiss franc and Canadian dollar, but the news didn’t have much of an impact on the euro upon release, as this is a very lagging indicator and more recent data, such as the composite purchasing managers’ index (PMI) for the region, has shown that the economy showed some signs of growth during Q3.
Nevertheless, the European Central Bank is anticipated to leave rates unchanged at 1.00 percent at 7:45 ET on Thursday. Where the currency ends the day, though, may have more to do with what ECB President Jean-Claude Trichet says during his post-meeting press conference at 08:30 ET. Traders will likely focus on any comments regarding the future of interest rates in the region, including whether the next move will be an increase, as well as statements on exit strategies for the central bank’s liquidity programs.