EUR/USD preserves losses after EZ GDP, US trade balance, initial jobless claims

Having fallen to daily lows earlier, the euro continued trading lower against the US dollar on Thursday, as economic recovery in the Euro zone showed signs of a slowdown during the third quarter of the year, while US trade balance deficit widened in September and initial jobless claims decreased less than projected last week.

After sliding to a session low at 1.3418 at 11:20 GMT, EUR/USD cross regained certain ground to trade at 1.3458 at 13:39 GMT, yet still losing 0.20% for the day. Support was likely to be found at November 12th low, 1.3358, while resistance was to be encountered at November 7th high, 1.3529.

It became evident that economic recovery from 18 months of recession in the Euro zone has slowed down during the third quarter, as exports dropped, while regions second largest economy, France, contracted again, reversing the tendency of growth. According to preliminary data, announced earlier on Thursday, the Gross Domestic Product of the bloc increased merely 0.1% during the third quarter compared to the second, when economy expanded 0.3%, following six consecutive quarters of recession due to the debt crisis. Some analysts predict that economic growth may decelerate because of seasonal factors, with revival of German construction sector fading and other regional economic data – missing projections made by experts. As growth remains suppressed and the common currency – relatively strong, export from Euro zone countries may continue facing difficulties.

Germanys preliminary Gross Domestic Product rose 0.3% in the third quarter, compared to the second three months, meeting expectations but decelerating in comparison with Q2, when economy grew 0.7%. On annual basis, German GDP climbed 1.1% in Q3, following a 0.9% gain during Q2.

French economy, on the other hand, contracted 0.1% during the third quarter of the year compared to the second quarter, following a 0.5% gain in Q2. The annualized GDP figure grew 0.2% in Q3, slowing down in comparison with the revised up 0.5% gain in Q2.

Italian economy continued to be in a recession in the third quarter, but however, nations GDP shrank at a lesser rate in comparison with the preceding quarter. The preliminary Gross Domestic Product dropped 0.1% in Q3, or the least since the autumn of 2011, meeting expectations, after a 0.3% decline in Q2. Industrial sector in the country demonstrated a better performance and provided a certain support. In annual terms, nations economy contracted 1.9% in Q3, also in line with forecasts, as it shrank 2.2% in the second quarter. In case final data matches the above mentioned preliminary results, Euro zones third largest economy will confront a ninth consecutive quarter of contraction.

Meanwhile, in the United States, the deficit on nations trade balance widened for a third month in a row in September, reaching 41.778 billion USD, as in August the deficit figure has been revised up to 38.701 billion USD from 38.803 billion USD previously. Export of goods and services dropped at a moderate pace, while import of oil and cell phones increased. Experts had expected a deficit at the amount of 38.700 billion USD in September. Imports rose 1.2% to reach 230.7 billion USD, while exports fell 0.2% to 188.9 billion USD in September. Trade with China produced a new record deficit, amounting to 30.5 billion USD. On the other hand, trade with Euro zone countries registered a lesser deficit of 8 billion USD in September, while a month ago the deficit figure pointed 9.8 billion USD.

Additionally, the Department of Labor said that the number of people who filed for unemployment assistance in the United States decreased for a fourth consecutive week, which came as another evidence that the labor market is in a process of improvement. The number of initial jobless claims, an indicator for lay-offs in the country, dropped by 2 000 to reach 339 000 during the week ending on November 9th 2013. Results, reported in the preceding week, have been revised up to 341 000, while preliminary estimates pointed that claims will drop more, to 330 000. The average number of claims during the past four weeks, an indicator considered as lacking seasonal effects, decreased to 344 000.

Non-farm productivity in the country increased 1.9% during the third quarter on a quarterly basis, after a revised down 1.8% gain in Q2. Preliminary estimates showed an increase by 2.2% in productivity.

Market players now focused on the upcoming Senate hearing, which will confirm Janet Yellen as the first chairwoman of the Federal Reserve Bank, after she made dovish remarks on Wednesday, saying that US labor market and economy as a whole were “performing far short of their potential” and there was “more work to do” on economic recovery.

Elsewhere, the euro was losing ground against the pound, with EUR/GBP cross down 0.42% on a daily basis to trade at 0.8366 at 14:21 GMT. EUR/JPY pair, however, was advancing 0.54% to trade at 134.57 at 14:22 GMT. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, fell to 81.04 at 14:00 GMT.

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