Eurozone inflation increases

Data today has confirmed that EUR inflation has moved higher to
1 per cent from a low point of 0.7 per cent last month.  The
number is still well short of the 2 per cent target but will reduce
fears that the Eurozone is slipping into a deflationary spiral and
will give some relief to the ECB.  Euro unemployment data also
improved slightly from 12.2 per cent down to 12.1 per cent which is
a surprise gain.   However, money supply data (M3 growth)
dropped yesterday to 1.4 per cent from 2.1 per cent and this
feedback could still cause concerns at the ECB continuing a lean to
a dovish agenda.

In other news, the credit rating agency S&P downgraded the
Netherlands sovereign rating to AA+ but upgraded the outlook for
Spain from negative to stable.  Overall the data and the
feedback gives a very mixed bag and no clear direction for the
euro. Next weeks’ central bank meeting will be the focus of
attention along with the Bank of England and the US non-farm
payroll data.

Yesterday, Bank of England governor Mark Carney took action to
curb the UK’s house price boom by ending incentives for mortgage
lending.  Data yesterday back the reasoning for this move with
UK nationwide house prices increasing to 6.5 per cent in November
against 5.8 per cent in the previous month.  Today is Black
Friday in the US so we expect thin markets once again in US trading
this afternoon.