Japanese inflation in June remained unchanged at 0.1%, whilst inflation remains far from the 2% target zone set by the Bank of Japan: due to the fall in energy prices for the most part. Although, inflation on the whole does coincide with Japanese central bank expectations, whereby they forecasted that the increase in prices would be close to null until autumn at the earliest. A combination of stagnation of prices, coupled with an expected shrinking of the economy could spark woes of deflation.
June household expenses fell by 2% when taking into account the correction on inflation contrary to the forecasted growth. Unemployment rose to 3.4% in June from May’s 3.3%. The amount of jobs in relation to those searching for work stood still at 1.19.
The June Eurozone CPI values remained unchanged with MOM prices growing at 0.2%. The base inflation rate increased in June from 0.8% to 1% in July. The level of unemployment in the Eurozone rose by 0.1% in July to 11.1%.
The weak data says a lot about how the ECB’s bond purchasing program hasn’t achieved the required effect. It’s possible that the ECB will have to consider the extension of the program up to September 2016. Earlier this week the IMF announced that it expects Eurozone inflation to remain below the ECB’s target zone (just under 2%) until the end of 2020. In this case, the Eurozone financial powers that be really will have to extend their QE program.
The market reaction was quite conservative with the euro/dollar up slightly and trading around 1.0974.
Today it’s worth giving the Canadian May GDP values a glance and also have a look at the consumer confidence index from Michigan and the number of drilling rigs in operation according to data from Baker Hughes.