The eurozone’s inflation rate remains in what the ECB refers to as the “danger zone,” a situation that hasn’t surprised anyone. However, the ongoing problems with the eurozone economy continue to provide fuel for speculation that policymakers will be forced to take more drastic steps to boost the economy. This is once again creating a situation in which the euro struggles against some of its counterparts.
Today, Eurostat reports that consumer prices for the month of June rose 0.1 per cent in the month of June. The year over year gain is only 0.5 per cent. This keeps the eurozone in the “danger zone” — where it’s been for months now. ECB policymakers prefer that inflation be closer to 2 per cent (but not above that level).
Only five countries in the eurozone, including Germany, had inflation that reached the 1 per cent level. This once again underscores the differences between the periphery and other countries in the eurozone. Indications that confidence in Germany might be faltering isn’t likely to do the area any favors, either.
For now, the euro is struggling against some of its counterparts. The latest news indicates the ECB will have to take more drastic steps likely to weaken the euro.
At 14:43 GMT EUR/USD is down to 1.3523 from the open at 1.3525. EUR/GBP is up to 0.7908 from the open at 0.7893. EUR/JPY is down to 137.2990 from the open at 137.5125.
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