Blog

Forex News – Eurozone economic morale worsens in August to 8-month low

Posted on August 28, 2014 at 11:23 am GMT

Michalis Florentiades, XM Investment Research Desk

A slew of data from the Eurozone today were not very inspiring as they did not provide optimism for the region’s economic recovery.

Economic sentiment surveys for the 18 countries in the euro-area were overall soft. According to the European Commission, economic morale in August was the worst since December 2013, falling more-than-expected to 100.6 from a previous revised 102.1 in July. Forecasts for the index were for a drop to 101.5. A main catalyst for the decline was a drop in the retail, consumer and industry sectors.

More negative assessments of future unemployment and the future general economic situation in the Eurozone dampened industry confidence and led to more cautious views on expected production.Consumer inflation expectations edged down in August to 8.6 from 8.7 in July.

The Eurozone’s Business Climate Index however came in better-than-expected. The headline number came in at 0.16, from 0.17 in July which pointed to a more optimistic phase of the business cycle.

Meanwhile, the final print of consumer confidence came in at -10.0, as expected.

The mostly softer data overall reflect the bigger picture of stagnant growth in the Eurozone. Recent data show that the recovery stalled unexpectedly in the second quarter and the outlook for a stronger recovery could be hampered by the crisis in Ukraine as trade with Russia is impacted and could affect business mood in the Eurozone.

Throughout the day, German inflation data are anticipated. Germany is the Eurozone’s largest economy so the data will be closely watched. Should the German CPI signal a stronger bias towards deflation, it will fuel caution towards the Eurozone. On Friday, Eurozone CPI data are due. If the figures disappoint and show that the Eurozone is falling significantly towards deflation this would raise alarm for the ECB and increase the likelihood that policy action would be taken, which would add selling pressure on the euro.

Eurozone forex news

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.