Inflation in the eurozone slowed to 5.3% versus 5.5%, missing the market forecast of 5.2%. That can be interpreted as a sign of a tightening continuation by the ECB. The reaction of the euro to the data was bullish at first. However, it was a relatively modest increase due to GDP figures that came in line with the forecast. Economic growth in the eurozone came in at 0.6% in Q2. At the same time, the reading for Q1 was revised down to 1.0% from 1.1%. In other words, the economy showed a worse-than-expected performance.
Eurozone GDP
A fall in the euro followed. The currency rate dropped below the open price on the back of reports about a looming recession in Europe, which is likely to be deeper than in 2008-2009.
Today, the euro may extend losses, and the unemployment rate will be the main driving force. Thus, unemployment in the eurozone is forecast to rise to 6.6% from 6.5%. A slowdown in economic growth together with a rise in unemployment could be a sign of a deeper and prolonged recession in Europe. At the same time, it is natural that people lose their jobs during such times.
Eurozone unemployment
The US and the eurozone will see the release of manufacturing business activity data today. In both cases, figures are projected to come in line with preliminary estimates. If they miss expectations, some adjustments may follow. Likewise, US job openings will be of little importance. Although they should drop to 9,500,000 from 9,824,000, there is no direct correlation with unemployment. So, the figures will have no significant effect on the market.
