Market Overview

Eurozone Inflation Disappoints

Eurozone Inflation Disappoints
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The euro saw modest gains on Thursday morning after US GDP data disappointed and sent the greenback lower.

The common currency traded at $1.3871 at 5:30 GMT after falling to a three week low on Wednesday following the release of lackluster inflation data.

On Wednesday, eurozone inflation came in below expectations, confirming that the region was set to experience a long period of low prices.

The Wall Street Journal reported that April’s consumer prices increased 0.7 percent on the year, a slight gain from March’s 0.5 percent figure, but still far below the European Central Bank’s two percent target.

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The increase will likely keep the ECB from reducing interest rates or using other measures to stimulate the bloc’s economy at its policy meeting next week.

However, since there wasn’t a huge improvement, most expect that the bank will be under pressure to act in June if May’s figures don’t show a marked improvement.

Though the bloc has been battling falling consumer prices for some time now, its recovery has been unphased. Spain reported that growth had improved in the first quarter and revised its growth forecasts for the next two years higher.

German unemployment has been on the decline, and Belgium reported rising GDP. With the region’s other economic figures improving, many don’t see a need for the bank to intervene.

The euro found some support after the data showed that the US grew at just 0.1 percent on the year in the first quarter.

The figure was well below expectations, and caused the greenback to fall 0.4 percent. Despite the poor data, the Federal Reserve elected to continue tapering its bond buying plan by $10 billion this month.

Posted-In: European Central BankNews Eurozone Forex Global Federal Reserve Pre-Market Outlook Markets Best of Benzinga


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