Eurozone Creeps Towards Deflation
Inflation in the Eurozone continues to drop and it could well be a slow march to deflation. Although inflation figures released yesterday showed a minimum decline from 0.4% to 0.3% it is now almost 2 years since the Eurozone level was at 2.0% which is the optimal level for stability and growth. With levels at a 5 year low, the follow on effects could cause consumers to delay purchases, companies to lose revenue and unemployment to soar even further. As European central bankers meet in Naples, they certainly have lots on their plate.
Further poor results out of Australia as retail sales came in at less than expected levels have also reignited the decline of the Australian Dollar.
GDP out of the UK was stronger than expected and although this saw the Pound gain against the Euro, the story wasn’t the same against the US Dollar as they needed to be stronger to gain some momentum.
Today we have PMI from the Eurozone and the UK, mortgage applications from the US and most importantly ISM from the USA.