Eurozone prints a better than expected jump in headline and core inflation in November

on Nov 29, 2019
Updated: Mar 11, 2020
  • Eurozone highlights an increase in headline and core inflation in November.
  • German retail sales dropped by 1.9% in November versus the estimate of 0.2%.
  • Unemployment in Germany dropped sharply in November against the analysts forecast.
  • Services sector noted the highest increment in prices.
  • EurUsd broke above 1.10 and is settling around 1.1020 following a daily low of 1.0980 on Friday.

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With figures for economic data turning green for Euro, Friday marked a good day for the currency. With trade tensions weighing on the European currency and the decline in manufacturing expected to hurt the job prospects, analysts were expecting the German unemployment to mark a slight increase in November. Against the forecast, however, the German unemployment change surprised the forex market earlier today.

Germany’s Unemployment Rate Drops To 5%

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Experts were expecting an additional 6,000 people to be out of jobs in November. As per the report, however, the unemployment in Germany was reported to have dropped by 16,000 people. The 5% jobless rate, the reports adds, is close to an all-time low for Germany.

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Following the 1.9% drop in retail sales versus the estimate of 0.2% decline, that was announced on Friday, the upbeat unemployment report came to rescue the European currency that has been dwindling near the year-to-date low of around 1.09 against the U.S dollar in the past weeks.

Germany has noted a rebound in business confidence and factory orders in November. Such data supported German Chancellor, Angela Merkel’s stance that the current financial outlook doesn’t hint at the need of deviating from the balanced budget. Bundesbank President, Jens Weidmann, has echoed Merkel’s stance on multiple occasions as well.

Eurozone also announced the data for headline and core inflation. Owing to a commendable gain in services prices, Eurozone printed an increase on both fronts. Headline inflation in November saw an increase from last month’s 0.7% to 1.0% in November. Analysts had previously estimated a narrower increase (0.8%) than this. Core inflation for the Eurozone, on the other hand, was reported to have hiked from 1.1% in October to 1.3% in November. Analysts had forecasted the Eurozone to record 1.2% core inflation this month.

Highest Increment In Prices Was Reported In The Services Sector

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The inflation report further highlighted that all sectors other than energy, registered an increase in prices. The highest increment was reported in the services sector. The Italian prelim CPI also turned green on Friday to add to the strength for Euro in the forex market. Against the analysts’ estimate of a 0.2% decline, the CPI held its ground at 0.0%.

Following the positive data for Euro, one of the most commonly traded pair in the forex market, EUR/USD was seen breaking above the 1.10 level again. The pair had dropped as low as 1.0980 earlier in the day. With a gain of 0.10% for the day, the pair has retreated back to the 1.1020 level. As per the forex experts, Eur/Usd is set to finish the week on a positive note.


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