In the first part of the European session we received 3 economic reports from Europe: labour market data from Germany and Eurozone and also Eurozone producer inflation. All the data seems to support further inflation growth.
In Germany, the unemployment rate remains at 5% and the number of unemployed fell by 13,000 for April, with an expected drop of 15,000 and a previous drop of 18,000. The data is slightly worse than expected, but still puts upward pressure on wages.
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Create account Try a demo Download mobile app Download mobile appThe Eurozone market is also doing well. The unemployment rate is down from 6.9% to 6.8%, although a drop to 6.7% was expected. Of course, the situation on the labor market in the Eurozone is completely different than, for example, in the USA. In the case of the euro zone we have a lot of inequalities between the economies, which does not allow for such a dynamic reaction with the monetary policy as in other economies.
On the other hand, the PPI inflation in the Eurozone is growing by as much as 36.8% y/y with the expectation of 36.3% and the previous level of 31.5%. On a monthly basis, PPI inflation is up 5.3% m/m with expectations of 5.0% m/m and on the previous level of 1.1% m/m.
Even without energy costs, producer inflation is rising at an enormous pace in the Eurozone. Source: Eurostat
Volatility on EURUSD is negligible today. EURUSD is slightly above the level of 1.0500. At the same time the pair is below the lower limit of the downward trend channel. Near the level of 1.0600 there is resistance strengthened by the Fibo 161.8 retracement of the last large upward wave from the 2nd half of March. Tomorrow's Fed decision may slightly increase the volatility on the main currency pair. Source: xStation5
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