The Euro-zone economy shrank for the second time in 3 quarters according to a revised estimate; the second quarter gross domestic product was down 0.2%, following an unchanged GDP in Q1. The estimate for the annual GDP growth was revised slightly lower, from -0.4% to -0.5%, while the quarterly GDP estimate remained the same, according to Eurostat.
Household consumption also fell 0.2% in the second quarter, following last quarter’s 0.2% decline. Exports rose by 1.3% in the Euro-zone while imports also were 0.9% higher. Euro-zone government expenditures were up 0.1%.
The Euro-zone economy has been suffering because of the Euro debt crisis, and a lower GDP should be currency negative. Later today, the ECB will release its decision on the interest rate for September, most analysts expect the central bank to cut the rate 25 basis points to 0.50%. Additionally, ECB President Draghi will hold a press conference following the release, where he could announce the details of a bond purchasing program.
The Euro did not react to the revised GDP, and anticipation for the ECB announcement has sent the single currency higher in today’s trading. Earlier today, EURUSD crossed above 1.2600, where the pair has experienced resistance over the past few weeks. Possible resistance could be provided by a month-long upward trend channel around 1.264.