Today’s Data Should keep the Euro Bearish Form Months to Come
The economy of he Eurozone has weakened considerably in the last year and the economic data is getting weaker still. Manufacturing and the industrial sectors are in contraction while inflation has softened a lot. Core CPI fell below 1.0% in March which is the minimum level for the ECB, but we did see a pop during April.
Although, that was due to the Easter holiday. In May and in June inflation fell further and it was expected to tick lower today again, both headline CPI (consumer price index) and core CPI. Here is the inflation and the GDP reports released earlier this morning:
| Economic Data | Actual | Expected | Previous |
| Eurozone CPI YoY | 1.1% | 1.1% | 1.2% |
| Eurozone Core CPI YoY | 0.9% | 1.0% | 1.1% |
| Eurozone Unemployment Rate | 7.5% | 7.5% | 7.5% |
| Eurozone Prelim Flash GDP QoQ | 0.2% | 0.4% | 0.4% |
| Spanish Flash GDP QoQ | 0.5% | 0.6% | 0.7% |
| Italian GDP QoQ | 0.0% | -0.1% | 0.1% |
| French Prelim CPI MoM | -0.2% | -0.3% | 0.2% |
As you can see, most of the numbers are red, which means that today’s readings either missed expectations or declined compared to last month. Headline CPI ticked lower to 1.1%, but what’s more important, the core CPI lost 2 points and fell below 1.0% again this month.
These figures justify the really dovish bias from the ECB last week. The GDP figures were also pretty weak, with the Eurozone GDP being slashed in half in Q2 compared to Q1, while in Spain the GDP missed expectation and in Italy growth remained stagnant last month. The Euro should remain bearish for the coming months, particularly on the inflation numbers,although the Euro did nothing after the release because everything is centered around the FED meeting this evening.
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