FOREX-Euro slips on German recession fears, sterling steady

* German GDP at 0900 GMT could show technical recession

* Sterling in focus before parliamentary vote, hovers near$1.29

* Aussie, kiwi dollar gain versus the greenback

By Tom Finn

LONDON, Jan 15 (Reuters) - The euro edged down on Tuesday asinvestors prepared for German growth figures that could indicatethe continent's largest economy went into a technical recessionin the last quarter of 2018.

A unexpected fall last week in German industrial outputweakened the euro and underscored concerns about a slowdown andthe European Central Bank's caution as it tries to wean theregion off stimulus.

German exporters are struggling with weaker global demandand trade disputes driven by U.S. President Donald Trump'spolicies.

Economists polled by Reuters expect figures for grossdomestic product (GDP) data due at 0900 GMT to show 1.5 percentgrowth in 2018. But it is the breakdown of the last quarter ofthe year that is in focus.

"German GDP will attract more attention than usual this timearound given all the talk about recession," said Commerzbankrates strategist Christoph Rieger.

Investors are closely watching sterling with British PrimeMinister Theresa May widely expected to lose a vote inparliament later on Tuesday on her Brexit deal.

"Speculators have been betting a failed vote could lead to apossible delay to Brexit from 29 March to July to allow forfresh elections or a second referendum," Philip Wee, currencystrategist at DBS, said in a note.

Other analysts expect the pound will take a major beating ifMay loses the vote by a wide margin since it could push Britaincloser to a chaotic exit from the European Union.

Sterling GBP=D3 traded flat against the dollar at $1.2871ahead of the vote, close to a 2-month high hit on Monday of$1.2930.

The dollar slipped on Tuesday as fears about a slowdown inglobal growth heightened expectations of a pause in FederalReserve rate hikes.

A shock contraction in Chinese trade and worries over theU.S. economy losing stream have bred fears of a sharp globaldownturn that would probably see the Fed refrain from tighteningmonetary policy this year.

That has seen the dollar weaken against its peers by morethan 1 percent since the start of the year.

The dollar index .DXY on Tuesday weakened by 0.1 percentto 95.48.

Elsewhere, the Australian dollar AUD=D3 and kiwi dollar NZD=D3 , both considered proxies for global risk appetite, wereup 0.2 percent each, having recovered from Monday's lows.

Sentiment was aided by a fresh round of commitments fromChinese policymakers to stimulate their economy though fiscaland monetary steps.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics

Stocks World Markets


Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More