The rate of decline in producer prices in the Eurozone slowed from -3.4% to -3.2%, contrary to expectations of an acceleration to -3.5%. This indicates that, while likely to decrease, inflation in Europe may do so more slowly than anticipated. As such, it seems increasingly likely that the European Central Bank will soon conclude its interest rate cut cycle.
Additionally, employment in the United States increased by only 146,000, significantly below the forecast of 180,000, which is insufficient to maintain labor market stability.
All this data points toward growth for the euro. However, the market remains stagnant, primarily because tomorrow's U.S. Department of Labor report looms, and investors appear unwilling to take risks prematurely. Secondly, the euro is under pressure from the political crisis in France. Yesterday, the National Assembly passed a vote of no confidence in the government, and time will now be needed to form a new administration.
The market will likely continue its stagnation today, even with the release of Eurozone retail sales data, which is expected to show a slowdown in growth from 2.9% to 2.5%. If yesterday's data fails to impact the market, a retail sales report alone will likely be insufficient. The market clearly remains focused on tomorrow's U.S. Department of Labor report.