The Euro has slid by its largest margin in eight weeks against the US Dollar as a number of data releases out of the single currency region disappointed investors and as speculation rises that the European Central Bank will have to cut interest rates further to try and save the region’s economic recovery.
Inflation data for the Eurozone caused the currency to tumble after it showed that the pace of inflation fell to its slowest pace in four-years in October, causing concern that the European Central Bank will not be able to achieve its target of 2%.
According to the European Statistics office in Luxembourg the annual rate of inflation fell to 0.7%, the lowest level recorded since November 2009, and a drop from September’s level of 1.1%. The data increased speculation that the ECB may have to consider cutting interest further, beyond the already record low level of 0.5%. Some economists are increasing their bets that a cut could occur as soon as December.
“The inflation data should increase market speculation that the ECB changes its bias on inflation risks. Our economists now forecast a rate cut in December. Given that the market has underpriced this, we think that there is substantial scope for the Euro to weaken in the next few weeks” said BNP Strategists.
Data out of Germany, the region’s largest economy also damaged demand for the Euro as retail sales and consumer confidence fell more than forecast.
The most disappointing release however was the rise in unemployment in Italy. The number of people out of work in the country hit a new historic low level of 12.5%, its highest level recorded since records began in 1977.
A separate report showed that in the wider Euro zone unemployment rate remained unchanged at a record high 12.2% in September, compared to expectations for a decline to 12%.
“The latest figures put a dent in hopes that the labour market may have reached a turning point,” said an analyst from Capital Economics.
Unemployment was lowest in Austria, and Germany where employment hit an all time record high. Over 42 million people are in work in the country with 2.8 million unemployed. The German Institute for Labour Market Research warned however that the number of Germans working part time or in low-wage, so-called “mini jobs” has more than double since reunification, to around 12.7 million.
Euro (EUR) Exchange Rates
As of 12:00 pm GMT
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3647
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8509
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4348
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6459
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4263
The Euro/ Japanese Yen Rate Exchange Rate is currently in the region of: 134.0604
The Euro/Swiss Franc Exchange Rate is currently in the region of: 1.2338
The Pound Sterling/ Euro Exchange Rate is currently in the region of: 1.1754
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7331
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6970
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6074
The Canadian Dollar/Euro Exchange Rate is currently in the region of: 0.7010
Swiss Franc/Euro Exchange Rate is currently in the region of: 0.8104
