In early European deals on Tuesday, the euro jumped to its highest level in almost 2- 1/2 -months against the pound after a final report showed that the German economy recovered from the worst recession since the Second World War on strong government and household spending.
Meanwhile, the euro recovered from a 4-day low against the yen, but it plunged against the dollar and the franc.
The Federal Statistical Office report, released today, showed that the largest Euro-zone economy grew slightly for the first time, following four quarter-on-quarter decreases in a row. The economy expanded 0.3% sequentially in the second quarter, after contracting 3.5% in the first quarter.
Economic growth was driven by a 0.7% rise in household spending and a 0.4% increase in government final consumption expenditure in the second quarter.
The German government led by Chancellor Angela Merkel has been pouring billions of euros to shore up the recession-hit economy.
In contrast to sequential growth, the price-adjusted GDP was considerably lower than a year ago. GDP was down 7.1% in the second quarter, the largest annual decrease since quarterly GDP data were first produced in 1970, the statistical office said. On a working day adjusted basis, GDP slipped 5.9% versus first quarter's 6.7% decrease.
The statistical office confirmed the initial estimate for the second quarter GDP released on August 13.
The euro, which closed yesterday's trading at 0.8713 against the pound soared to a 2 1/2 -month high of 0.8737 in early deals on Tuesday. The next upside target level for the euro-pound pair is seen at 0.887.
In economic news from U.K., the British Bankers' Association report showed that the number of mortgages approved for house purchases in the UK totaled 38,181 in July compared to 35,564 in June. Mortgage approvals for July also exceeded the expected level of 37,800 and increased 76.7% from the prior year.
The euro gained against the yen after falling to a 4-day low of 133.97 at 2:10 am ET Tuesday. As of now, the euro-yen pair is worth 134.73, compared to 135.23 hit late New York Monday. The near term resistance for the European currency is seen around the 135.9 level.
In early deals on Tuesday, the euro slipped to 1.5161 against the Swiss franc. If the euro-franc pair edges down further, it may find near term support around the 1.514 level. At yesterday's close, the pair was quoted at 1.5183.
The franc advanced against the euro despite a report showed that total employment in Switzerland fell for the first time since the third quarter of 2003. By the end of the second quarter, there were 4.493 million people in job, down 0.3% from the previous year, the Federal Statistical Office said today.
Switzerland's employment level in the second quarter fell 0.4% year-on-year to 3.945 million, the statistical agency said. It was expected to fall only 0.1%.
The euro declined to a 4-day low of 1.4255 against the dollar during early trading on Tuesday. On the downside, 1.421 is seen as the next target level for the euro. The euro-dollar pair was worth 1.4304 at Monday's close.
Reports that U.S. President Barack Obama nominated Federal Reserve Chairman Ben Bernanke for a second four-year term, also seemed to have an impact on dollar. Bernanke's term was to expire at the end of January, and his reappointment will require senate confirmation. His term as a policy board member does not expire until 2020.
Bernanke led the biggest expansion of the central bank to avert a second great depression, pared the primary interest rate to near zero, led the rescue of Bear Stearns and American International Group and also poured $1 trillion into the financial system to stabilize the banks.
Investors are now likely focus on the North American session, in which the S&P/Case-Shiller home price index is scheduled to be released at 9 am ET. Economists expect a 16.40% year-over-year decline in the 20-city composite house price index for June.
euroAt 10:00 am ET, the Conference Board is scheduled to release its consumer confidence report for August. The report, which is based on a survey of 5,000 U.S. households, is expected to show that the consumer confidence index rose to 48 in August.
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May 08, 2026 15:50 ET Manufacturing and services sector survey results and labor market data from main economies were the highlight on the economics news front this week. Factory orders and jobs report dominated the news flow in the U.S. Similarly, industrial production data from German garnered attention in Europe. In Asia, purchasing managers’ survey results from China and the central bank decision from Australia were in focus.