Euro bounces off four-month lows after the release of German first quarter GDP data that showed the German economy grew five times more than expected, confirming that it avoided a recession.
The data show that growth in Europe’s largest economy expanded by 0.5 percent on the quarter versus a 0.1 forecast. Meanwhile, the yearly number came in at 1.7 percent versus the expected increase of 0.9 percent .
This helped ease the selling pressure on the single currency which has been dogged by political uncertainty in Greece since the failure of the May 6 election to form a government, casting doubts on Greece’s future within the euro zone.
EURUSD rose from 1.2838 where it was before the news to 1.2868 within two hours of the data.
In contrast to Germany’s strong growth figures, French economic growth remained stagnant in Q1, and was weaker than expected on the year. The new French leadership under Francois Hollande is expected to work with German officials to stimulate growth in the 17-member Euro area, although differences between the two countries have recently emerged.