Forex News: Euro-Zone Sees a Small Drop in Inflation
THE TAKEAWAY: Euro-zone annual inflation drops to 2.5%in October -> Unemployment at 11.6% in September -> Euro trading steady following an earlier rise…
Euro-zone annual inflation has dipped to a 3-month low in October as the rise in energy costs slows. The consumer price index was 2.5% year over year, coming in as expected and slightly lower than September’s 2.5% inflation rate, according to Eurostat. The annual rise in energy prices fell to 7.8% from 9.1% in September, while food prices rose 3.2% from October 2011, higher than the 2.9% annual inflation in September.
A fall in the annual inflation rate allows the European Central Bank more leeway to cut its interest rate, which would be Euro negative. The central bank last cut the interest rate to 0.75% in July, and ECB president Draghi has said that he prefers to implement the OMT purchase plan in place of further interest rate cuts.
Also in forex news, Euro-zone unemployment was also reported today at 11.6% in September, slightly higher than expectations for 11.5% and higher than August’s revised 11.5% unemployment rate. The unemployment is significantly higher than the 10.3% rate in September of 2011, as the Euro debt crisis has placed immense pressure on the Euro-zone economy. The total amount of people looking for work in the Euro-zone now stands at 18.49 million. Germany reported a 5.4% unemployment rate, while Spain had the worst rate of unemployment at 25.8%.
The two releases did not significantly affect forex trading as they were both close to expectations. EURUSD is currently trading above 1.3000 following Rajoy’s comments about needing EU help for Spain’s budget. Resistance might now be found by a year-long falling trend line, which currently sits around 1.3105.
EURUSD 15-minute: October 31, 2012
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