Economic data out of the Euro zone countries displayed better than
expected economic performance and helped drive the currency 70 pips off
its daily low. The German jobless rate unexpectedly improved 0.1
percentage points to 11.7 percent in June, as unemployment fell by
23,000 jobs versus expectations no change. The rate was said to have
decreased to 11.3 percent in yesterday’s leaked report, but the economy
added only 4,000 new jobs versus expectation of a 10,000 gain, keeping
unemployment high. In other news, French 1st quarter GDP growth was
revised up 0.1 percentage points to 0.3 percent, and year on year
growth was revised up by the same amount to 1.8 percent. Its 0.3
percent growth still lags overall Euro zone growth of 0.5 percent, but
upward revisions point to better overall performance.
The euro likewise received a boost from soft U.S. economic data, as lower inflation cast doubts on the future of FOMC rate hikes. Personal income rose less than expected at 0.2 percent, while spending remained unchanged in the month of May. With consumer spending accounting for two-thirds of U.S. GDP, reduced growth may slow down overall economic performance. The PCE deflator, an inflation index, likewise came in below expectations to 2.2 percent, below the 2.7 percent experienced in April. Reduced inflation could give the Fed reason to slow in its measured pace of rate hikes. This provides improved outlook on the euro, as the U.S. dollar has rallied based on expectations of Federal Reserve interest rate increases.
European equities markets were mixed on the day, as the telecommunications sector continued its advance while energy producers declined on easing oil prices. The FTSE Eurofirst 300 fell 2.44 points to 1141.48, London’s FTSE 100 gained 4.10 points to 5,113.20, Germany’s DAX index inched 2.65 points higher to 4,586.86, and France’s CAC-40 was 2.53 points lower to 4,229.35.
BP Plc, Europe’s biggest oil company, led the losses in the energy sector, falling 1.02 percent to 581 pence, while BG Group Plc, a U.K. based natural gas producer, dropped 0.9 percent to 460.75 pence.
France telecom continued its gains after yesterday’s announcement of higher dividends, as Smith Barney recommended its clients buy into the French firm’s stock. It rose 1.51 percent to 24.160 euros on the day.
The European bond market rocketed towards all time highs, as the German 10 year Bund added 0.498 points to 101.20, dropping yields to 3.116 percent. This is less than 2 basis points off Tuesday’s all-time low yield of 3.101. Despite today’s positive economic data, investors do not expect significant growth in the European economy and continue investing heavily in fixed income.
The euro likewise received a boost from soft U.S. economic data, as lower inflation cast doubts on the future of FOMC rate hikes. Personal income rose less than expected at 0.2 percent, while spending remained unchanged in the month of May. With consumer spending accounting for two-thirds of U.S. GDP, reduced growth may slow down overall economic performance. The PCE deflator, an inflation index, likewise came in below expectations to 2.2 percent, below the 2.7 percent experienced in April. Reduced inflation could give the Fed reason to slow in its measured pace of rate hikes. This provides improved outlook on the euro, as the U.S. dollar has rallied based on expectations of Federal Reserve interest rate increases.
European equities markets were mixed on the day, as the telecommunications sector continued its advance while energy producers declined on easing oil prices. The FTSE Eurofirst 300 fell 2.44 points to 1141.48, London’s FTSE 100 gained 4.10 points to 5,113.20, Germany’s DAX index inched 2.65 points higher to 4,586.86, and France’s CAC-40 was 2.53 points lower to 4,229.35.
BP Plc, Europe’s biggest oil company, led the losses in the energy sector, falling 1.02 percent to 581 pence, while BG Group Plc, a U.K. based natural gas producer, dropped 0.9 percent to 460.75 pence.
France telecom continued its gains after yesterday’s announcement of higher dividends, as Smith Barney recommended its clients buy into the French firm’s stock. It rose 1.51 percent to 24.160 euros on the day.
The European bond market rocketed towards all time highs, as the German 10 year Bund added 0.498 points to 101.20, dropping yields to 3.116 percent. This is less than 2 basis points off Tuesday’s all-time low yield of 3.101. Despite today’s positive economic data, investors do not expect significant growth in the European economy and continue investing heavily in fixed income.
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