German Employment and Eurozone Inflation in Focus
European data will be in focus on Friday, with German employment figures and European core inflation released.
EURAUD: Daily Chart
EURAUD has now hit some resistance at the 1.6515 level, and the data could confirm a correction in play, with a clear level available for a breakout higher.
Germany’s job market is expected to add 13k jobs after last month’s 9k. The country posted 130k jobs a year ago but has been struggling since September, with unemployment expected to stay stuck at 5.6%. The German economy continues to weigh on the eurozone, with the country in a recession and companies pressured by inflationary pressures. A hawkish European Central Bank has added to the pressure on German consumers and businesses.
The French economy will release its inflation figures for June, with a drop to 4.6% expected from 5.1%. That will be followed by Euro area core inflation, where analysts expect to see a rise to 5.5% from 5.3%.
EURAUD Forecast
A surprise drop in inflation would help boost the Australian dollar and add to the potential for a correction in the euro. Australian inflation is still stubborn but trending lower, like in Europe.
Australia’s treasurer, Jim Chalmers, said: “The 400-basis point increase in rates since before the election last year is the most significant tightening cycle the RBA has undertaken since the inflation targeting era began”. “And this, along with global challenges, will significantly slow our economy.”
The Australian economy could see its GDP drop to 1.5% in 2023–24 from 3.25% this fiscal year, Chalmers said.
European Central Bank comments have boosted the euro recently, but a drop in inflation could see traders pull back on bullish bets.
