THE TAKEAWAY: Producer prices in the Euro area lower than expected in April -> Lower energy costs, deepening economic slump factor into drop -> Euro price action reserved after yesterday’s weakness
Euro-area producer price inflation slowed for the seventh month in a row in April, the EU stats office said today. The softer than expected number was thought to be caused by declining energy costs and a weakening economic situation, highlighted by European leaders’ inability to resolve the Greek issue.
Declining oil prices have eased the burden on beleaguered European manufacturers, sending producer prices down. Meanwhile, plummeting economic confidence and sky-high unemployment rates have raised speculation that the European Central Bank will ease rates at its next policy meeting.
The Euro traded quietly on Monday, well within the weekend range which saw weakness in risk correlated assets. EURUSD hit a fresh yearly low by 1.2286 over the weekend as investors continued to loose confidence in the single currency.