Fundamental Comment

Euro expands losses after eurozone inflation data


The euro continued to fall during Friday’s trading for the fifth straight session, as inflation data in the euro zone remained far from target, along with rising dollar levels, adversely affecting the European single currency.

As today's Eurozone inflation data is somewhat distant from the ECB's target, providing much support for policymakers to take some measures over the next month to shake up growth.

Compared to the economy's 1% forecast plus the ECB's target of 2%, the underlying measure of inflation was slightly lower, at 0.9%, and the basic measure excludes more volatile elements such as energy, food and tobacco.

On the other hand, it should be noted that the Eurozone's inflation trajectory has been at a bearish juncture for months, but is now about half the rate it was a year ago. This will prompt policymakers to respond with more monetary stimulus over the next month.

More to mention, if the ECB turns to stimulus, it will join other central banks that have resorted to dealing with the slowdown in the global economy by lowering their interest rates.

In the same context, the Eurozone's unemployment rate was somewhat high, reaching 7.5% in July, unchanged from Last June, the lowest level since 2008. In 2013, the unemployment rate was 12.2%.

The European central bank is scheduled to hold its meeting on September 12th in Frankfurt, Germany, where markets are looking ahead to the future policy that the ECB will draw for the Eurozone in the coming period.

As of 13:00 GMT, the EUR/USD fell to trade at 1.1039 after a one-month low of 1.1033 and was trading at 1.1056.

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