Euro reversed its losses today and recorded gains of about 0.09% against the US dollar, and the 1.08520 level is preparing for the peak of the rises.
The euro’s gains today come despite a larger-than-expected rise in unemployment and a larger-than-expected contraction in retail sales in Germany, in contrast for a slower-than-expected inflation with a slight growth in GDP in France.
The unemployment rate in Germany reached 5.9% in February, contrary to expectations of 5.8%, with a greater than expected increase in the number of unemployed by 11 thousand compared to expectations of 7 thousand. Earlier this morning, retail sales contracted unexpectedly by 0.4% in February on a monthly basis, compared to an expected recovery of 0.5%.
As for France, the figures were brighter, with an unexpected growth in GDP in the fourth quarter of 0.1% compared to the third quarter of last year. Inflation also slowed less than expected to 2.9% on an annual basis compared to expectations for it to decline to 2.7%. However, this slowdown in inflation in February came after a higher-than-expected contraction of consumer spending in January by 0.3% on a monthly basis.
While the mixed data for the Eurozone was eventually reflected in the return of rises in bond yields, which led the euro to record gains today. German ten-year bund yield is once again approaching their highest levels this year, reaching 2.483% at the peak of today’s rises.
As for later today, the markets are awaiting the January reading of the Personal Consumer Expenditure Price Index (Core PCE), as the higher-than-expected reading of the Federal Reserve’s preferred gauge for tracking inflation may mean more pressure on the euro, which is suffering from the flow of negative data for the region’s economy, which in turn may a race to lower interest rates this year is unlikely to support growth.
