Economic Numbers Across the European Region Uneven
- Swiss PPI came out below expectation
- Current Account released in European Union
- Highly disappointing Retail Sales in UK
- EU released CPI figures during session
- European region likely to underperform rest of world
On Friday, the European figures came out for multiple European countries, and they are showing just how uneven the region truly is.
The Swiss, the European Union, and the British all released figures that show there are still plenty of concerns when it comes to this part of the world. In fact, the Europeans in general have been underperforming many of the other economies globally, such as Canada, the United States, and Asia.
Initially, the Swiss released Producers Price Index figures month-over-month, coming out at 0.1% as opposed to 0.2%, which was expected by the market. This shows that the Swiss economic situation is still highly dependent on the EU, which has been slow. This also indicates a deflationary concern when it comes to Switzerland, which will keep the Swiss National Bank very loose.
The EU released Current Account figures at €33.9 billion, which was less than the expected €34.3 billion. The previous number was revised from €32.4 billion as opposed to €35.8 billion. This shows that exports out of the EU are slightly lower than anticipated. In that same vein, the Italian Trade Balance came out at €4.87 billion, which turned out to be much less than the expected €7.22 billion for the announcement.
Shortly afterwards, the British released Retail Sales month-over-month, coming in at a dismal -0.6% as opposed to the anticipated 0.5%. Furthermore, the previous announcement was revised downward from -0.6% to the -0.8% reading. This sent the British pound tumbling, although it already seems to be recovering.
Finally, the EU released Consumer Price Index figures as well as the Core Consumer Price Index figures. The Final CPI year-over-year figures came out at 1.3% just as expected. Furthermore, the Final Core CPI year-over-year figures came out at 1.3%, which was also expected at the exact same figure.
This shows that the European Union is doing exactly as anticipated, and therefore it continues to disappoint in general. However, stabilization is crucial to turn things around, and we are starting to see that happen.
The EU will continue the struggle
Going forward, it’s obvious that the EU will continue to struggle against the comparisons to North America or Asia. With that being the case, the equity markets in places like New York and Tokyo should continue to outperform places like Frankfurt and London.
If so, equity flows will continue to favor those spots, meaning it could have a bit of a knock-on effect on the currency markets as well.
That being said, most global traders will do “pairs trades”, taking advantage of the strength in places like New York, while shorting similar companies in others like Frankfurt.