CAC Quiet as Eurozone CPI Estimate Matches Forecast

In the Monday session, the CAC index is almost unchanged. Currently, the index is at 5,132.50, up 0.06% on the day. On the release front, Eurozone CPI Flash Estimate remained unchanged at 1.3% in July, matching the estimate. The Eurozone unemployment rate dropped to 9.1% in June, down from 9.3% a month earlier. On Tuesday, the eurozone releases Preliminary Flash GDP, with an estimate of 0.6%.

The CAC recorded slight losses on Friday, as French indicators were mixed. Consumer spending came in at -0.8%, missing the estimate of -0.3%. On the inflation front, Preliminary CPI declined 0.3%, just above the forecast of -0.4%. This marked the indicator’s weakest reading since January. There was better news from Flash GDP for Q2, which improved with a gain of 0.5%, matching the forecast. This was the strongest quarter of growth since Q1 in 2016.

A stronger eurozone economy has seen unemployment levels drop, as the June rate of 9.1% marks the lowest level since 2009. However, major eurozone members such as France, Italy and Spain continue to grapple with high unemployment, with the notable exception being Germany. In France, for example, unemployment improved in the first quarter of 2017, but remains high at 9.6%. Even with the German locomotive firing on all 4 cylinders, the Eurozone flash estimate for inflation was unchanged at 1.3%, well below the ECB’s target of just under 2%. The ECB’s ultra-easy accommodative policy is set to wind up in December, but the cautious ECB has not hinted at an earlier termination date or tapering the current purchases of ECB 60 billion/month. The ECB has said it will not make any changes before inflation moves closer to its inflation target, but the euro continues to move higher. On Friday, EUR/USD touched a high of 1.7777, its highest level since January 2015. A stronger euro has been weighing on European stock markets, as export shares such as automobile makers have dropped since their products have become more expensive on world markets.

Economic Calendar

Monday (July 31)

• 5:00 Eurozone CPI Flash Estimate. 1.3%. Actual 1.3%
• 5:00 Eurozone Core CPI Flash Estimate. 1.3%. Actual 1.3%
• 5:00 Eurozone Unemployment Rate. Estimate 9.2%. Actual 9.1%

Tuesday (August 1)

• 5:00 Eurozone Preliminary Flash GDP. Estimate 0.6%

*All release times are EDT

*Key events are in bold

CAC, Monday, July 31 at 8:30 EDT

Open: 5124.50 High: 5149.80 Low: 5124.50 Close: 5134.30

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