German, Spanish, Italian data may push euro zone inflation higher

* German annual HICP inflation at -0.1 pct in Feb

* Spanish harmonised prices -1.2 pct y/y, Italian +0.1 pct y/y

* Some economists still see deflation risk for euro zone overall (Adds detail, economist quotes, context)

By Michelle Martin

BERLIN, Feb 27 (Reuters) – German and Spanish consumer prices fell in February but annual inflation in these economies was not as deep in negative territory as in January while prices turned slightly positive in Italy, potentially lifting the euro zone figure slightly.

In Germany, Europe’s largest economy, consumer prices harmonised to compare with other European countries fell for a second consecutive month. But at -0.1 percent, the drop was not as marked as last month when prices fell by 0.5 percent, preliminary data from the Federal Statistics Office showed.

That was not as low as the Reuters forecast, which had been for a 0.4 percent drop, but it was still a long way off the European Central Bank’s target for close to but just under 2 percent over the medium term in the euro zone.

“Along with the increased values in Spain and Italy, this points to a higher reading for the euro zone inflation figure due to be published on Monday,” said Ulrich Wortberg, economist at Helaba bank.

In Spain, EU-harmonised consumer prices fell by 1.2 percent year-on-year in February after dropping by 1.5 percent last month. In Italy the year-on-year rate turned slightly positive after two months of deflation.

Preliminary euro zone inflation data, due out on Monday, is expected to show consumer prices fell by 0.5 percent in the single currency bloc in February after dropping by 0.6 percent last month, according to a Reuters poll.

“Given that the money supply and the credit volume have developed positively recently, the ECB’s economic and disinflationary concerns should decrease somewhat ahead of the start of the expanded QE programme,” Wortberg said.

Economists said there were no signs of a deflationary trend in Germany, which grew by 0.7 percent at the end of 2014 thanks to private consumption. German workers’ paychecks are getting bigger and that, along with low inflation and a robust labour market, is helping to boost private consumption.

Negotiated wages including special payments climbed by 3.2 percent last year – the biggest increase since the statistics were first compiled in 2010 – and Germany’s biggest trade union, IG Metall, securing an inflation-busting 3.4 percent wage hike.

But Jennifer McKeown, economist at Capital Economics, said deflation was still a danger in other parts of the euro zone.

“In all, today’s data have done little to reduce the threat of deflation in the euro zone and offer ample justification for the ECB’s quantitative easing programme,” she said, adding it may be too little too late to avoid a period of deflation.

(Reporting by Michelle Martin; Editing by Stephen Brown)

Euro zone inflation dips; Italian jobless hits record

“The scale of the disinflation problem facing the ECB becomes increasingly concerning as time progresses,” Colin Bermingham, an economist at BNP Paribas said in a research note after the release.

“Three of the big four euro zone economies have reported inflation for November and all three are below 0.5 percent (year-on-year).”

Italy jobless hits record

Meanwhile, unemployment figures for October showed a reading of 11.5 percent for the euro zone, holding steady from September. Italy was the major drag with the struggling nation’s numbers reaching a record higher of 13.2 percent in October.

This is the highest the figure has ever been since records began back in 1977. The youth unemployment rate – those aged between 15 and 24 – came in at 43.3 percent, adding 0.6 percentage points in a month, according to the statistics agency Istat.

Read MoreEurope’s bond yields slide on hopes of ECB QE

ECB stimulus?

The inflation data come at a key time for the ECB, just days ahead of its next policy meeting on Thursday. The bloc has been staring down the barrel of negative growth and weak demand, with tensions in Ukraine pressuring Germany in particular.

Market watchers have been busy this week placing bets on whether Mario Draghi, president of the ECB, will announce more stimulus, even as soon as next week.

German annual inflation to remain moderate in Oct, state data suggests

BERLIN, Oct 30 (Reuters) – Annual inflation in Europe’s largest economy looks set to stay moderate in October, according to data from some German states on Thursday, suggesting the risk of deflation in the wider euro zone has not yet abated.

Data from three federal states showed yearly inflation holding steady, while consumer price pressures eased in one state and picked up in another one. The yearly readings were all well below the European Central Bank’s target for close to but just under 2 percent over the medium term in the euro zone.

In North Rhine-Westphalia, Germany’s most populous state and a bellwether for the national rate, consumer price inflation eased to 1.0 percent from 1.1 percent.

A Reuters poll conducted ahead of the states’ data releases found economists expected national inflation harmonised to compare with other European countries – the ECB’s preferred measure – to pick up to 0.9 percent from 0.8 percent.

Carsten Brzeski, senior economist at ING, said the national inflation rate would either hold steady or come in slightly lower than expected. If it remains unchanged, the euro zone rate could remain at 0.3 percent in October, he said.

“With Germany still having these relatively low inflation numbers, the euro zone as a whole will continue flirting with deflation,” he said.

Preliminary euro zone inflation data, due out on Friday, is expected to show the annual rate accelerating to 0.4 percent from 0.3 percent, according to a Reuters poll. The ECB considers anything below 1 percent to be in its “danger zone”.

But Brzeski said the ECB was unlikely to act based on inflation readings at its rate-setting meeting next week.

“The ECB is clearly staying on hold almost no matter what’s going to happen because they’ve done so much and they only have a few bullets left,” he said.

The ECB has started buying covered bonds to revive the euro zone economy and keep deflation at bay. It will also start buying asset-backed securities some time in the fourth quarter and will offer another round of four-year loans at ultra-cheap rates in December.

Pan-German inflation figures are due to be published at 1300 GMT.

(Reporting by Michelle Martin)

Euro zone inflation at 5-year-low; ECB action eyed

Euro zone inflation continued to fall in August, boosting expectations that the European Central Bank (ECB) will try bolster the region’s economy by announcing further stimulus measures – perhaps as early as next week.

Consumer prices rose by just 0.3 percent year-on-year in August, according to official figures released by Eurostat Friday, meeting expectations but marking a fresh five-year low. This is down from 0.4 percent in July, and is significantly below the central bank’s target of just below 2 percent.

Separate data revealed that the rate of unemployment in the euro zone remained stubbornly high in July, at 11.5 percent, unchanged from June.

Read MoreEuro zone yields turn negative on Draghi hopes

The inflation data come at a key time for the ECB, just days ahead of its next policy meeting on Thursday. ECB President Mario Draghi hinted at further stimulus measures in a speech in Jackson Hole last week, as economic data for the euro zone continue to surprise on the downside.

The closely-watched composite Purchasing Managers’ Index (PMI) – which measures business activity in the euro zone – slipped in August, coming in below forecasts. In addition, official figures revealed that economic growth in the region was stagnant in the second quarter, with gross domestic product (GDP) flat, below analysts’ expectations.

FOREX-Dollar holds steady but euro struggles on inflation concerns

* Speculation of more ECB action keeps pressure on euro

* Euro near lowest since January 2013 vs Swiss franc

* Investment flows into euro zone slowing – SEB (Adds fresh quote, U.S. data)

By Anirban Nag

LONDON, Aug 26 (Reuters) – The dollar held steady on Tuesday after its recent gains but the euro continued to struggle, pinned down near 19-month lows against the Swiss franc on expectations of soft inflation data and more monetary easing.

Weak German economic figures and the resignation of the French government following a row over fiscal policy added to the bearish mix for the euro.

The shared currency was trading at 1.2080 Swiss francs , having fallen to 1.2072 francs on Monday, its lowest since early January 2013 on trading platform EBS.

Its drop could test the Swiss National Bank’s three-year old pledge to cap the franc at 1.20 per euro.

“I haven’t heard anything about the SNB changing its commitment to the 1.20 floor and I don’t expect it to,” said Marshall Gittler, head of currency strategy at IronFX Global.

“That means the risk/reward ratio for long euro/Swiss franc positions is about as good as it gets right now. The rate can go somewhat lower and of course the SNB is not required to notify investors before changing its strategy. But past performance … does suggest they will keep the rate above 1.20.”

Against the dollar, the euro was subdued at $ 1.3198, having dropped to $ 1.3178 in Asian trade, its lowest in nearly a year. Following dovish comments from the European Central Bank chief at the weekend, German business sentiment data on Monday sagged for a fourth month running.

Investors betting on more euro weakness are now waiting for euro zone inflation data on Friday. Analysts polled by Reuters expect annual inflation to have slowed to 0.3 percent in August from 0.4 percent in July. That would be well below the ECB’s danger zone of 1.0 percent and its target of just under 2.0 percent.

Late on Friday, in stronger language than he has used in the past, ECB President Mario Draghi said the ECB was prepared to respond with all its “available” tools should inflation drop further.

Those comments have triggered speculation that the ECB may be prepared to ease policy further, driving bond yields to lows.


In contrast to Draghi, Federal Reserve Chair Janet Yellen on Friday acknowledged the concerns of some Fed officials about the sustained level of monetary policy stimulus, even as she stressed the need to move cautiously on raising rates.

While that meant higher short-term U.S. rates would bolster the dollar’s allure, it comes amid the spectre of slowing growth in the euro zone, making the bloc’s assets less attractive to investors.

“Over the past year, the euro has remained firm because investors have had a great inclination to increase their European portfolio holdings as the ECB has successfully stabilised the euro zone,” Robert Bergqvist, chief economist at SEB, wrote in his Nordic Outlook report.

“This factor is now fading in strength, which will later lead to a continued weakening of the euro against the dollar. We expect the euro at $ 1.30 at the end of 2014.”

The dollar index slipped as investors booked profits after two days of gains in the wake of Yellen’s comments at Jackson Hole. It held close to its September 2013 peak of 82.671. A break there will take it back to highs not seen since July last year.

Against the yen, the dollar dipped 0.2 percent to 103.85 , having peaked at a seven-month high of 104.49 overnight.

Investors will look to U.S. durable goods orders data later in the day, with forecasts for a 7.5 percent rise in July from a month earlier. Traders said if U.S. yields rise on stronger-than-expected data, it could push the dollar higher.

(Editing by Hugh Lawson)

FOREX-Euro hit by dovish Draghi, dollar powers up

* Euro falls to lowest in nearly a year against the USD

* Dollar index extend gains, up near one-year peak

* Euro zone inflation data key this week

By Ian Chua

SYDNEY, Aug 25 (Reuters) – The euro fell to its lowest in nearly a year against a broadly firmer dollar on Monday after comments from the head of the European Central Bank raised prospects of more policy easing as early as next week.

The common currency skidded to $ 1.3185 in early trade, from around $ 1.3246 late in New York. It also lost ground against many other currencies, notably hitting a near 10-month low on the Australian dollar at A$ 1.4163.

That helped lift the dollar index towards its Sept. 5 peak of 82.671. A break above will take it to levels not seen since July 2013.

In a stronger language than he has used in the past, ECB President Mario Draghi on Friday stressed the central bank is prepared to respond with all its “available” tools should inflation drop further.

“Even more significantly, Draghi departed from the script originally published on the ECB’s website on delivery, adding a section on inflation expectations during August,” said Ray Attrill, global co-head of FX strategy at National Australia Bank.

“He noted a decline in short, medium and longer term inflation expectations and indicated this would be acknowledged at the Sept meeting. So it looks like more easing ahead…”

The ECB holds its next policy review on Sept 4.

Ahead of that, euro zone inflation data due on Friday will be closely watched. Analysts polled by Reuters expect annual inflation to have slowed to 0.3 percent in August from 0.4 percent in July. That is well below the ECB’s danger zone of 1.0 percent and its target of just under 2.0 percent.

In contrast, Federal Reserve Chair Janet Yellen on Friday nodded to the concerns of some Fed officials about the sustained level of monetary policy stimulus, even as she stressed the need to move cautiously on raising rates.

“The Jackson Hole summit brought nothing new on the timing of the Fed’s first rate hike, but it confirmed a symmetrical conditional shift in the Fed’s labour-centred forward guidance towards potential earlier rates lift-off before mid-2015,” said Lena Komileva, chief economist at G+ Economics.

As a result, Fed funds futures fell back as the market priced in the risk of an earlier move on rates. Yields on two-year Treasury paper climbed over 8 basis points for the week, the largest such rise since June last year, while the yield curve flattened markedly.

That is helping the dollar outperform broadly. It hit a seven-month high against the yen at 104.49 before pulling back slightly to stand at 104.22. The New Zealand dollar plumbed a six-month low at $ 0.8336.

Traders said the market might have already seen the trading range for the day in Asia with little in the way of market-moving economic data. A bank holiday in Britain will ensure a quiet start to the European session as well.

(Editing by Shri Navaratnam)

FOREX-Lowest euro zone inflation in 5 years leaves euro weak

* Euro zone inflation at lowest in almost 5 years

* Upbeat U.S. Q2 GDP partly offset by mixed Fed views

* Dollar index set for biggest monthly gain in over a year

* Non-farm payrolls next in focus

By Jemima Kelly

LONDON, July 31 (Reuters) – The euro hovered near a nine-month trough against the dollar on Thursday after data showed euro zone inflation falling to its lowest since the height of the financial crisis five years ago.

Consumer prices in the 18 countries sharing the single currency crept up 0.4 percent on the year in July, down from 0.5 percent in June – uncomfortably close to deflationary territory and far below the European Central Bank’s 2 percent target.

In stark contrast, data from the United States on Wednesday indicated its economy is staging a robust recovery, with growth in the second quarter rebounding sharply from a weak start to the year and inflation moving closer to the Federal Reserve’s goal.

The weak euro zone figures will keep pressure on the ECB to loosen monetary policy further, though some analysts said the central bank would wait to see the effects of its latest round of measures, including a negative deposit rate and cheap long-term loans to banks, before announcing anything further.

“The ECB has set out the course of policy fairly clearly from here and the hurdle for moving it is higher than the 0.1 undershoot on a single month’s inflation data,” said Adam Cole, head of currency strategy at RBC Capital Markets.

Analysts said the market had largely priced in the fall in inflation, though it was slightly sharper than the 0.5 percent expected by economists in a Reuters poll.

The euro edged down to $ 1.3386, rooted close to the nine-month low of $ 1.3368 hit on Wednesday.

The dollar held just below a 10-month high against a basket of currencies after the Federal Reserve said it was in no rush to raise interest rates, tempering a rally that dates back to early May.

Adam Myers, head of currency strategy at Credit Agricole in London, said the dollar still looked strong but that gains, particularly against the euro, may be almost over for now. The dollar index is up more than 2 percent so far this month, on track for its biggest monthly gain in more than a year. It traded at 81.478, just off Wednesday’s high of 81.545.

“The market is now a little bit too far ahead of itself – there’s not going to be any Fed interest rate rises in the first half of 2015 and that’s what the market is pretty much pricing in at the moment,” he said. “It will only take a weak payrolls number and we’ll see quite a snapback.”

Data due on Friday is expected to show that U.S. employers added 233,000 new non-farm jobs in July.


The Australian dollar hit an eight-week low against the dollar, extending losses for a number of higher-yielding currencies. The Aussie fell to $ 0.9287 before recovering slightly to $ 0.9296, down 0.4 percent on the day, making it the worst performer among developed world currencies after mixed data on Friday.

Sterling was weakened by soft house price and consumer confidence data, as well as comments from Bank of England Deputy Governor Ben Broadbent, who said it was “quite possible” the currency was overvalued by as much as 10 percent.

The pound hit a seven-week low against the dollar of $ 1.6871 in European morning trade and was poised for its biggest monthly loss in over a year against the greenback.

Against the yen, the dollar climbed to a four-month high of 103.15, before steadying at 102.825. It was poised to gain about 1.4 percent on the month against the yen.

(Reporting By Jemima Kelly; Editing by Larry King and Toby Chopra)

Euro zone unemployment and inflation fell in June

Thursday 31 July 2014 10.34

Euro zone unemployment and inflation data has painted a mixed economic picture, with the jobless rate continuing to fall while declining prices suggested consumer demand remains weak, clouding the outlook.

The jobless rate in the 18-nation euro zone fell to 11.5% in June from 11.6% in May, hitting the lowest level since September 2012, the Eurostat statistics agency said.

Austria had the lowest unemployment rate during the month at 5%, with Germany close behind at 5.1%.

Greece had the highest unemployment rate at 27.3%, while Spain’s rate stood at 24.5%.

Ireland’s unemployment rate during June was 11.8%, according to Eurostat, down 0.1% on the May figure and 1.8% lower than in June 2013.

Meanwhile, inflation dropped to 0.4% across the euro zone in July, compared to June’s 0.5%.

This is its lowest rate since late 2009.

Services were 1.3% higher during the period, but energy prices fell by 1%.

Food, alcohol and tobacco prices were also down slightly during the period.

Euro dollar rate little changed today

Euro dollar rate little changed today

Tuesday, July 22 14:08:10

The U.S. dollar moved back to trade little changed against the euro, giving up earlier gains which drove the European currency to an eight-month low against the greenback on U.S. inflation data for June.

The Labor Department said today its Consumer Price Index increased 0.3 percent last month after May’s 0.4 percent gain. Gasoline accounted for two-thirds of the rise in prices last month. In the 12 months through June, the CPI increased 2.1 percent after a similar rise in May.

The dollar was last US$ 1.3479 against the euro, after earlier gaining to $ 1.3458, the lowest since November 21.

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Euro Shrugs Off Disappointing Economic Data

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The euro made its way toward $ 1.37 on Tuesday morning despite lackluster manufacturing and inflation data.

The common currency traded at $ 1.3691 at 8:20 GMT, near a six week high.

Eurozone inflation data released on Monday showed that the region’s annual rate of inflation remained dangerously low at 0.5 percent in June, far below the European Central Bank’s two percent target and well under one percent, what the bank has called “the danger zone.”

The report also included lending data which was equally as disappointing. The figures showed that lending to the private sector declined by 4 billion euros.

On Tuesday, CNBC reported that eurozone manufacturing activity fell to a seven month low in June, though it remained above the 50 point mark which indicates growth.

The bloc’s Manufacturing Purchasing Managers’ Index was 51.8 in June, below estimates of 51.9 and down from May’s 52.2 reading.

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However the euro mostly shrugged off this data as the dollar dipped this week on fading hopes that the Federal Reserve will raise its interest rates any time soon.

On Monday, the President of the San Francisco Fed, John Williams, further confirmed speculation saying that the bank will likely maintain its current interest rates for at least a year.

Recent data from the US has raised concern about the stability of the nation’s recovery, leading many to believe that the Fed will be more cautious about tightening. Consumer spending data out this week raised a red flag for many investors as it softened in June, something that could have a significant impact on second quarter GDP.

After a difficult first quarter, most expect that the US economy grew in the second quarter, but maybe not by as much as originally estimated.

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