Euro-Zone Deflationary Trends Increase Chances of Interest Rate Cut
Posted on 03. Dec, 2008 by admin in Daily Euro Analysis, Euro Currency, Euro Currency News
The EUR underwent a bullish trading session yesterday, as it appreciated against most of its major currency rivals. The EUR rose 0.7% and closed near the 1.2700 level versus the USD in yesterday’s trading session. Also, the EUR saw steady gains against the GBP and JPY. The only major economic event that came out of the Euro-Zone yesterday was the Producer Price Index, however, which was slightly lower than analysts had forecasted, helping to keep volatility to a minimum.
Euro-Zone producer prices slightly fell further than expected in October, underlining deflationary trends in the recession-hit economy and the potential for a deep interest rate cut. Moreover, a drop in the cost of Crude Oil pulled down factory prices in the 15-nations of the Euro-Zone by 0.8% for an annual rise of 6.3%. Producer prices are an indication of inflationary pressure because rises, unless absorbed by retailers via lower profit margins, are eventually passed on to consumers.
Looking ahead to today, the most important financial indicator scheduled to be released from Europe is retail sales. Analysts are forecasting this figure to decrease from its previous reading. Traders will be paying close attention to today’s retail sales announcement, as a stronger than expected result may continue to bolster the EUR.
producer price index
04. Dec, 2008
WASHINGTON (Reuters) – Producer prices declined by a record 2.8 percent in October after energy prices slumped, government data on Tuesday showed, but a key measure of core inflation at the farm and factory gate rose by more than
Euro-Zone Deflationary Trends Increase Chances of Interest Rate …
04. Dec, 2008
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