Euro resilient despite gloomy growth outlook

The euro recovered from near nine-month lows against the dollar on Thursday on relief that the Euro zone as a whole did not shrink in the second quarter, despite a contraction in its biggest economy, Germany.

Though Euro area growth stalled in April-June, missing modest expectations of 0.1 per cent, the numbers provided some respite for the euro after the weaker than expected data from Germany and France. The latter has failed to produce any growth at all since the start of the year.

The final reading for euro area inflation of 0.4 per cent in July on an annualised basis, though weak, was in line with expectations.

The euro hit a high of $1.3396 after the overall Euro zone data, having fallen to $1.3348 after the German numbers, close to a nine-month low of $1.3333 touched last week.

German 10-year bond yields briefly traded below 1 per cent for the first time ever, after the disappointing data from the supposed powerhouse of Europe.

Spanish and French bond yields also plumbed record lows as the bloc's grim growth outlook increased pressure on the European Central Bank to eventually print money to support an economy bracing for the impact of tit-for-tat sanctions between the West and Russia over Ukraine.