NEWS / Foreign Exchange

Euro-Zone Unemployment Falls to Multi-Year Low

- The European indices are currently in positive territory in the session led higher by the mining sector as metals prices continue to rise.

- European government bonds are currently trading lower in the session ahead of the array of economic data due out in the US this morning. Similarly in the UK gilts are trading lower following a better than expected reading on the UK manufacturing PMI. The French treasury announced overnight that it will be selling ?‚¬4.2-?‚¬4.7B in 2017 and 2038 OATS on June 7.

- As expected, Swiss consumer prices declined to 0.2% m/m in May from April??™s 1.1% (which was the highest since November of 1991). Y/Y consumer prices remained unchanged at 0.5%.

- German retail sales for the month of April rose to 2.6% m/m, above estimates of 0.8%, and declined by less than expected to ??“0.6% y/y. The large m/m rise is an indication that, perhaps the German economy has recovered from any impact resulting from the implementation of the VAT hike in January.

- Manufacturing PMI figures in the Euro-Area were mixed with both Italy and France exceeding analysts??™ expectations, while Germany and the Euro-Zone fell below expectations. All figures remained above 50 indicating further expansion within the coming months. In the UK manufacturing PMI exceeded expectations, and included an upward revision to the prior month??™s reading.

- The Euro-Zone unemployment rate, which was expected to remain unchanged at 7.2%, fell to a 7.1%, its lowest level in over a decade due to significant declines in Bulgarina, German, Polish, and Romanian unemployment.

- As expected, preliminary first-quarter GDP in the Euro-Zone was 0.6%. On the Euro-Zone GDP front, the EU Commission released its forecasts for GDP overnight. While the fourth-quarter forecast was unchanged, the range for both the second and third quarters was revised to 0.4%-0.8% from the previous range of 0.4%-0.9%.

- In Fed speak overnight the Fed??™s Kroszner said that risks to inflation are failing to moderate. Kroszner noted that subprime mortgage problems are likely to remain contained. Kroszner said that resource pressure, and energy costs are inflation risks, and said that the recent slowdown in productivity could be transitory.