The Euro reversed some of Wednesday’s sharp declines against the Pound after investors embarked on a bout of profit taking but the single currency is likely to remain under pressure throughout the session following the release of a number of poor data releases in the Eurozone.
Unemployment in Greece climbed to a new record high in November according to the Hellenic Statistics Authority. The figures released show that around 3.5 million people are in work but are supporting 4.7 million unemployed or economically inactive people.
The overall unemployment rate increased to a new record high of 28%, the eight consecutive month in which unemployment has been above 27%.
In terms of age group, the largest proportion of unemployed was in the under-25 age group, where 61.4% are registered as unemployed, up from the 57.9% recorded in the previous month. The data did little to ease concerns that the region’s economic recovery is stalling.
More worryingly for the wider Eurozone was the publication of a report which showed that inflation eased yet again in the region’s largest economy, Germany. The Euro tumbled substantially yesterday after an ECB policy maker said that the Central Bank was considering implementing negative rates to counter the threat of deflation.
According to the German Federal Statistics Office inflation eased from the 1.4% recorded in December to 1.3% on a 12-month basis. On a month by month basis inflation stagnated at 1.2%. The rate is still well below the ECB’s target of 2%. The European Union’s Statistics Office, Eurostat said that euro zone inflation grew by only 0.7% in annual terms in January, a level that some experts find alarming.
The Euro is likely to decline as the week draws to a close due in part to the data and as political turmoil threatens to once more engulf Italy. Prime Minister Enrico Letta is battling to hold on to his job after being challenged by Matteo Renzi. The situation could come to a head later in the session.
If Friday’s Eurozone GDP flash growth rate report comes in below expectations then the currency is likely to fall against most of its peers.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3669 ,
Euro,, Pound Sterling,0.8214 ,
Euro,,Canadian Dollar,1.5017 ,
Euro,,Australian Dollar,1.5250 ,
Pound Sterling,,Euro,1.2173 ,
[/table]
