EUR Bounces back as Eurozone Inflationary Pressure Builds Further

It was another busy economic calendar this morning. Member state and Eurozone inflation figures were in focus along with French consumer spending and German unemployment. 3^rd quarter GDP numbers from France also garnered interest.

French Economy

In the 3^rd quarter, the French economy expanded by 3% in the 3^rd quarter, which was in line with prelim figures. In the 2^nd quarter, the economy had expanded by 1.3%.

Consumer prices were on the rise once more, according to prelim figures. In November, France’s annual rate of inflation picked up from 2.6% to 2.8%. Month-on-month, consumer prices rose by 0.4% off the back of a 0.4% increase in October.

According to Insee.fr,

• Energy prices were up 21.6% year-on-year, driving inflation further northwards.
• There was also an increase in prices for food (+0.4%).
• Prices for manufactured products increased by 0.8% and for services by 1.9%.

While inflationary pressures continued to build, consumer spending was in the decline. In October, consumer spending decreased by 0.4%, reversing a 0.2% rise from September.

German Economy

In November, Germany’s unemployment rate fell from 5.4% to 5.3%, supported by a 34k decline in unemployment. In October, there had been a 39k fall in the number of unemployed.

Eurozone Inflation

For the Eurozone, the annual rate of inflation picked up from 4.1% to 4.9% according to prelim figures for November. Month-on-month, consumer prices rose by 0.7% after having increased by 0.7% in October.

According to Eurostat,

• Energy is expected to have the highest annual rate in November (27.4% compared with 23.7% in October).
• Services is expected to have an annual rate of 2.7%, up from 2.1% from October.
• Non-energy industrial goods saw a pickup from 2.0% to 2.4% with food, alcohol, & tobacco up from 1.9% to 2.2%.

Market Impact

Ahead of today’s stats, the EUR had fallen to a pre-stat and current day low $1.12848 before making a move.

In response today’s stats, the EUR rose to a post-release and current day high $1.13728.

At the time of writing, the EUR was up by 0.64% to $1.13638.

Next Up

Consumer confidence figures from the U.S and the 1^st day of FED Chair Powell testimony.