Eurozone Trade Data Tests EUR Support after First Deficit Since 2014

It was a busier day on the Eurozone economic calendar. Finalized inflation figures for France and Spain were in focus along with trade data for the Eurozone.

French inflation

France’s annual rate of inflation held steady at 2.8% in December, which was in line with prelim figures.

Month-on-month, consumer prices increased by 0.2% after having risen by 0.4% in November, which was in line with prelim figures.

According to Insee.fr,

• Energy prices fell by 0.9%, month-on-month, after having risen by 1.5% in November.
• The prices of services were up 0.4% versus 0.2% in November and food prices were up 0.5% versus 0.4% in the month prior.
• Year-on-year, core inflation was up 2.0%, however, picking up from 1.7% in November.
  • Prices for manufactured goods were up 1.2% versus 0.8% in November.
  • Food prices rose by 1.4% after a 0.5% in November.

Spanish Inflation

Spain’s annual rate of inflation accelerated from 5.5% to 6.5%, which was down from a prelim 6.7%.

Eurozone Trade

In November, the Eurozone’s goods trade balance narrowed from €3.3bn surplus to €1.5bn deficit, versus a forecasted €7.6bn surplus.

According to Eurostat,

• Euro area exports of goods to the rest of the world increased by 14.4% to €225.1bn, compared with Nov-2020.
• Imports from the rest of the world were up 32% to €226.6bn, compared with Nov-2020.
• The rise in imports was as a result of an increase in the value of energy imports.
• In Nov-2020, the Eurozone had a €25bn surplus.
• The last time the Eurozone recorded a deficit was in Jan-2014.
• Intra-euro area trade rose to €204.3bn in Nov-2021, up by 22.1% compared with Nov-2020.

Market Impact

Ahead of today’s stats, the EUR had fallen to a pre-stat and current day low $1.14514 before rising to a pre-stat and current day high $1.14829.

In response to today’s stats, the EUR rose to a post-stat high $1.14748 before falling to a post-stat low $1.14555.

At the time of writing, the EUR was up by 0.03% to $1.14578.

Next Up

ECB President Lagarde is scheduled to speak ahead of U.S retail sales figures for December. With the U.S annual rate of inflation at its highest since 1982, the markets will be looking for any impact of rising prices on consumer spending.

Other stats include U.S industrial production and consumer sentiment figures. Expect the retail sales figures to be key.