Yesterday’s data package from Europe shows that the absence of negative surprises is mainly due to low expectations. However, across the ocean, the results (as well as the situation with currencies) look better.
Inflation In Germany Is On The Rise
Yesterday’s data shows that, against expectations, Germany did not manage to keep inflation at 2.2%. The result of 2.3% is not theoretically very bad, but considering recent doubts about ECB’s future decisions, we should consider if even such a detail could not push back the next interest rate cut by one meeting. If this happened, it would be a signal strengthening the euro against the dollar. Looking at the weaker run of the European currency against the dollar in recent weeks, one might expect that investors will soon start looking for reasons to realize their profits and return from dollars to euros. On the other hand, it should be remembered that despite Germany being by far the strongest economy in the eurozone, it is not alone. In Spain, for example, inflation turned out lower than expected.
Preliminary GDP Readings
Yesterday we learned about a package of GDP data. It started from Hungary, where the GDP in the second quarter did not increase by 2% – as expected – but by 1.5%. This cost the forint a drop in value of over half a per cent against other currencies. In the Czech Republic it was fairly stable; although a result of 0.5% was not achieved, 0.4% may be due to rounding up. It is also worth pointing out that this is still Prague’s best annual result in over a year. Spain added higher than expected GDP growth to the already mentioned good data. Italy and Germany met expectations, showing respectively 0.9% and 0.3% growth. Although these results are not objectively good, they are in line with expectations. The entire eurozone, on the other hand, showed a result in the second quarter slightly above expectations, at 0.6%. It’s better, but it’s not the pace that the European Union is counting on.
Confidence Across The Ocean
Americans showed two indicators yesterday. On the one hand, the number of open job offers, amounting to 8.18 million positions. This is more than analysts expected, but it should also be noted that the local job market is experiencing some problems. Just two years ago, 2 million more jobs were being sought than currently. Consumer confidence index – Conference Board also scored better than expected. The index remained above 100 points despite pessimistic expectations. Better data once again allowed the dollar to attack the level of 1.08 against the euro.
Today’s macroeconomic data calendar is worth paying attention to:
14:15 – USA – ADP employment report,
15:45 – USA – Chicago PMI index.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl and Walutomat.pl
