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EURUSD Spikes On Improved Inflation Numbers

James Boston
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www.finances.com
EURUSD Spikes On Improved Inflation Numbers

Preliminary inflation figures for the Eurozone just published by Eurostat are showing a marginal increase in the rate of price growth across the 18 member bloc. The Consumer Price Index (CPI) data which has been released in preliminary format for the year to October is now reading at 0.4%, this represents a pick up from the final number of 0.3% recorded in September and comes in according to market expectations. The Core CPI number however has fallen back slightly, this now stands at 0.7% down from the 0.8% seen last month and missing the market consensus estimate which forecast no change in the number.

The break out of the figures confirms weakness in the manufacturing sector of the bloc, prices in the non-energy industrial are reported to have fallen -0.1% for the year to October in comparison to the growth figure of 0.2% recorded in September. The softest price activity area however is the energy sector, this has fallen -1.8% this month following on from a -2.3% drop in September. A significant pull back in the price of oil is the main driver behind falling energy prices and goes some way to explaining the divergence between the core and non core price indices. This divergence would be greater only for the increasing pace of price growth in the food, alcohol and tobacco sector, this area posted a gain of 0.5% for the 12 months to October, compared to just 0.3% for the year to September. The most expansionary sector however is Services, inflation in this area of the Eurozone economy is now running at 1.2% in comparison to 1.1% in September.

The finalised Unemployment numbers for September have been announced steady at 11.5%, there was no real expectation for an change in this figure despite some strong improvements being reported in some member economies, notably Spain.

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