The Last Volatile Week of 2022
The US Bureau of Labor Statistics will release its Consumer Price Index and many other critical events that will move the market this week!
Euro zone suffers loss of economic activity
What is happening?
Economic activity in service sector in the Euro zone and the UK is on its lowest rates since 2009.
How do we now that?
On Tuesday leading indicators of economic health in France, Germany and UK were released – French, German and UK Flash Services PMI. The numbers are disappointing as they came out below the expected level. At the same time, manufacturing industries were actually doing better than economists had predicted.
These indicators show how purchasing managers assess business conditions today. With people in France, Spain and Italy confined to their homes, travel plans being abandoned, with restaurants and other entertainment places being shut down, there is no surprise that service sector is struggling today.
What does it mean?
These indicators gave a first signal that euro zone economy is tilting to recession. Governments have started to guarantee loans for small companies, help those who lose their jobs, and boost spending. However, the European lockdowns will leave a 350 billion-euro hole in household incomes and company profits.
The threat is that if the containment measures are needed a long time, the euro area will collapse. The UK economy will contract by at least 10% in the first half of the year, according to Bloomberg Economics’ estimates. The economy in euro area is forecast to shrink 3.1% in first quarter, with another blow of 2.4% in the second.
The future of euro-area economy mostly depends on the measures that governments will take. That is why right now it is quite necessary to get updated not to miss fresh news that might influence the market.
The ECB and the EUR
The European Central Bank makes all efforts to cope with the extraordinary shock that stunned the market. For this reason, it scrapped most of the bond-buying limits in its 750 billion-euro ($819 billion) pandemic emergency program.
This program will continue all this year and will also allow the ECB to buy bonds with shorter maturities.
The long-term perspective of euro will depend on its effectiveness of every member of euro zone. We will monitor the situation closely and keep you updated as always.
Similar
Oil Experiences an 11% Weekly Loss
The ECB is expected to raise the interest rate to 1.5% and oil is falling
Two Central Banks Will Grab Traders’ Attention
The central banks' meetings will highlight the week as well as the PPI release
Latest news
Market Crash Incoming?
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
What Currency Will Overperform?
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
Investor Positivity May Fade After Powell's Speech and CPI Release
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
