Euro weakens on economic contraction

Euro weakens on economic contraction

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The euro weakened in relation to the US dollar and the yen after the European Union’s office of statistics released new data showing that the Eurozone’s gross domestic product fell by 2.5 percent in the first quarter, more of a decline than had been expected after the economy contracted by 1.6 percent in the fourth quarter.

It was the fourth consecutive quarterly contraction for the region, with the decline an even larger 4.6 percent when compared to the first quarter last year.

Germany’s economy contracted by 3.8 percent in the quarter, the biggest quarterly decline since records began in 1970, while France’s economy contracted by 1.2 percent in the quarter.

The euro was also hurt by disagreements among European Central Bank officials over issues such as the Bank’s program to purchase assets.

In late morning trade in New York, it took $1.3583 to buy a euro, while the yen traded at ¥129.1497 to the shared currency.

The yen saw gains on guesses that recovery from the recession could be a long, slow process, sentiment which reduced the demand for higher-yielding currencies.

At nearly 11:30 a.m. in New York the yen traded at ¥95.08 to the greenback, while it was at ¥10.9558 to the South African rand and at ¥14.6141 to the Norwegian krone.