Euro achieves limited gains following weak Chinese data

The euro rose against the dollar with the beginning of Tuesday’s trading session, but the upside move was halted and the pair stopped achieving gains after releasing Chinese growth data for the third quarter of this year, which magnified fears about the future of global economy growth.

The data showed that China`s Gross Domestic Product rose by year-on-year 7.3% in the third quarter, compared with the 7.5% in the three months ending June, yet beating analysts` median forecast of 7.2% growth.

The slowdown fueled concerns about failing to achieve the 7.5% annual growth target set by the government for 2014, in addition to speculations regarding the need to new stimulus measures to avoid further slowdown.

Thus, the weak Chinese data was added to the overall global economic growth concerns, which constitute an additional burden on the US economy in particular, and therefore the demand for the greenback.

Adding to the fears of a U.S. economic slowdown, the latest data from China has just brought another disappointment to the FX markets, especially high-yielding assets, which are taking a huge toll on the U.S. dollar.

In the Euro zone, fears of the slowdown continue to pressure the euro, prompting policymakers to seek further policy measures to shore up the 18-nation currency bloc.

Germany, the growth engine of the euro area, has also sent a downbeat tone concerning the second half of this year.

In its monthly bulletin released today, the Deutsche Bundesbank confirmed that the economy grew weakly during the third quarter of this year following a slowdown in industrial production and the deterioration of business sentiment.

The Bundesbank statement limited the euro gains early today, but further weakness in the euro area data will only keep the lid on the single currency for the rest of rest of the week.