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Euro zone optimism despite Greece

Monday, March 02, 2015 - 01:47

There's more encourgaing news for the euro zone - consumer prices fell by less than expected, core inflation held steady and unemployment eased. Sonia Legg asks if the region is managing to turn a corner despite Greece?

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Deflation is the big worry in the euro zone at the moment. But the latest data offers a little hope. Consumer prices in the 19 counties sharing the euro fell 0.3% year on year in February - half the previous month's drop. Combine that with easing unemployment and there's a glimmer of hope in the euro zone says CIBC's Jeremy Stretch - despite ongoing worries over Greece. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "Markets have become so pessimistic about the euro zone story it may well prove to be the case that the growth data does ultimately prove to be above expectations in the calendar year 15-16 and that will ultimately provide some respite for the euro zone negativity." France's manufacturing sector saw another downturn. New orders decreased sharply and sluggish demand led to more job cuts. But the picture in Germany was entirely different. New orders there were at a seven month high. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "Assuming we see a bottoming out of the French scenario and I think French politics will encourage a desire to perhaps put in some more radical measures over time then I think that will alleviate some of the concerns about France going forward and the legacy of Germany will perhaps act as a bit of a counter-weight to France and I think drag France along in its slip stream." Global factors like low oil prices and a cheaper euro are all beginning to bear fruit - and that's before the launch of the ECB's 1 trillion euro bond-buying programme (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "Anything below the 1.24 - 1.25 is suggesting the euro is lower than fair value and that will provide impetus for the recovery process." The ECB's meeting later this week is the next big event Bank President Mario Draghi will no doubt be delighted his rescue plan is having an impact before it's even begun.

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Euro zone optimism despite Greece

Monday, March 02, 2015 - 01:47