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Eurozone Inflation, GDP and US Jobs Data; What Will Move EUR Exchange Rates Next Week?

Strong Eurozone data is pushing Euro exchange rates higher this morning, but what is in store for the week ahead?

The Euro is approaching the weekend on the rise, thanks to data showing the French economy grew 0.5% in the second quarter, while growth of 0.9% in Spain marked not only the fourth year of solid growth, but also a return to its pre-financial crisis peak.

Further adding to market cheer is the news that economic sentiment in the Eurozone has inched up, taking the index to a ten-year high. This follows recent data suggesting confidence in Germany is also firming.

EUR is racking up the gains now, but will it be able to hold onto them next week?

Eurozone Inflation Data Threatens to Keep Monetary Policy Outlook Dovish

Eurozone consumer price data is set for release at the beginning of the week and, combined with today’s German inflation data, should give both the markets and the European Central Bank (ECB) something to ponder.

While the overall year-on-year inflation rate is predicted to weaken by -0.1%, core inflation is predicted to remain at 1.1%.

This leaves price growth for the currency bloc well below the ECB’s target range and is likely to weaken any expectations that policymakers are eyeing changes to monetary policy.

Euro exchange rates could therefore weaken during the course of Monday’s European trading session.

Strong Forecasts for German Unemployment Data, but Eurozone GDP May Slow; Will EUR Rise or Fall?

The publication of top-tier data continues on Tuesday, with the German unemployment change and unemployment rate figures, as well as second-quarter Eurozone GDP figures, set for release during the morning.

Forecasts are for a drop of -12,000 in the number of jobless during July, while the employment rate is expected to hold steady at 5.7%.

Despite recent signs of strength in the Eurozone economy, growth in the currency bloc is expected to have slowed from 0.6% to 0.4% on the quarter, while year-on-year growth will have edged up from 1.9% to 2%, providing mixed signals for the Euro.

Will Thursday’s ECB Economic Bulletin See Policymakers Express Confidence in Growth?

Things slow down on Wednesday, with only producer price index figures for the Eurozone during June on offer.

Thursday contains a big block of largely low-impact releases, such as the finalised versions of Italian, French, German and Eurozone-wide services and composite PMIs.

The European Central Bank (ECB) will also publish its latest economic bulletin, however, and Eurozone retail sales figures for June will be published.

Release of US Non-Farm Payrolls Report Threatens EUR Exchange Rates

Next week ends with Germany factory orders data, the German construction PMI, and the German, French, Italian and Eurozone retail PMIs for July.

According to forecasts, the data is likely skewed towards weakness, meaning the euro could end Friday’s European session on the decline.

Volatility for Euro exchange rates is virtually guaranteed on Friday, as the next US non-farm payrolls report is set for release.

This is one of the most influential data releases on the US economic calendar and has the potential to propel both the US Dollar and market expectations of another interest rate hike this year significantly higher if it prints strongly.

Forecasts are for a moderation on the previous month’s figures, although at 180,000, job creation will still remain firm.

This could apply additional downside pressure to the Euro going into next weekend.