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Euro GDP Growth Accelerates

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Euro GDP Growth Accelerates

Eurostat have just released this months Gross Domestic Product figures. Year on year growth has come in at 0.5% compared to the previous figure of -0.3%. At the same time the quarter on quarter number has been announced as 0.2% versus a previous reading of 0.1%

Additionally, this mornings announcement contained data on the Eurozone Producer Price Index for February, the important Year on Year number has been reported at -1.7%, against an expectation of -1.6% and a January reading of -1.4%. The monthly number was -0.2% versus a prior reading of -0.3% and a consensus expectation of -0.1%.

Generally the GDP figure should be the more important of today’s releases however in light of the concerning inflationary situation in the Eurozone it is natural that the markets are being somewhat more sensitive to Price Index data.

The Euro is now trading back above the key 1.38 level against the US Dollar as the markets test the resolve of the European Central Bank which meets tomorrow.

Inflation will be high on the agenda as the Bank comes to terms with latest concerning reading that has shown Eurozone prices decelerate to just 0.5% growth. More to the point the ECB will have to address the relentless rise of the Euro and the contribution that this over priced currency is making to the price stability situation.

ECB Vice President, Vitor Constancio, last night claimed that the low inflation readings within the Eurozone are an area for concern but that the Euro area is not at risk of entering a period of outright deflation. Constancio also announced that the ECB in fact expected the inflation figure to fall in March but that by the same token they anticipate it to rise again in April. This statement pushed the Euro higher as it indicates that the ECB may not react with further monetary easing tomorrow.

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