Currency Note Euro

Eurozone falls into deflation again

By Ricky Bean March 1st, 2016

The euro had a difficult start to the week after data came out showing that the Eurozone fell back into deflation in February for the first time in five months, which has increased expectations for additional stimulus measures from the European Central Bank (ECB). Consumer Price Index (CPI) data fell to -0.2% after a positive reading in January, despite expectation was that it would come out at 0.1%. The fall was largely down to falling energy costs, which were 8% lower in the year to February compared to the previous month’s 5.4% drop. This news has added serious pressure for the ECB to step up its quantitative easing program on the 10th March.

Today the euro could redeem itself with two releases from the Eurozone, starting with a Purchasing Managers’ Index. Released at 9am, this is expected to fall from 52.3 down to 51. At 10am unemployment figures are expected and are forecast to remain steady at 10.4%. However, this has been exceeding expectations in recent months by dropping slightly, so we could be in for a surprise.