Weak fundamental data continues to put pressure on the euro amid no signs of an uptrend in the eurozone’s inflation rate, which is likely to have fallen while core inflation continues to move sideways around 1 percent, according to the latest research report from Commerzbank.
The labour market data provided a short ray of hope in the currently rather dark economic times in the euro zone. It did not last long though. The weaker German inflation data that was published shortly afterwards ended that and as a result the euro even slipped to an annual low against the US dollar.
Even though the situation wasn’t as dramatic as the market would have us think. Our experts are pointing out that overall inflation was slightly lower than expected but the underlying inflation trend (measured as the core rate) has risen again.
As the labour market in Germany remains tight this positive inflation trend is likely to continue medium term. That means the market reaction was anything but justified, but what is feared is that this realisation is not going to filter through very quickly as today attention will initially focus on the price data for the entire euro zone. And this does indeed provide a rather depressing impression, the report added.


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