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Euro zone maths: Trump + data = uncertainty

Thursday, November 17, 2016 - 01:37

Euro zone consumer price growth accelerated slightly in October as expected thanks to more expensive services and smaller energy price falls, data shows. That's good news for the ECB but Trump's win poses new risks to the euro zone. David Pollard reports.

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It may have been an ocean away from the euro zone. But the wind of change from the US election travels far. (SOUNDBITE) (English) FIDELITY WORLDWIDE INVESTMENT, INVESTMENT DIRECTOR, TOM STEVENSON, SAYING: "Donald Trump ... casts a bit of a damper on the euro zone ... Any move towards a more protectionist stance in the US is bad news for Europe's exporters, and particularly Germany. " Annual inflation in the euro zone ticked up slightly in October but was still just half a per cent. The monthly rate slipped backwards. A sign, say economists, of still tepid demand. And - for the ECB pondering whether to extend its bond buying - challenging decisions. After a surge in bond yields on the expectation of a Donald Trump fiscal splurge. (SOUNDBITE) (English) FIDELITY WORLDWIDE INVESTMENT, INVESTMENT DIRECTOR, TOM STEVENSON, SAYING: "As bond yields rise that effectively is a fine, a tightening of financial conditions within the euro zone, so it puts pressure on the ECB to stimulate." The ECB may also be making more room in its thinking for political risk. Data like this week's rise in French unemployment now in the front line - as Europe's leaders prepare for battle in their own elections. (SOUNDBITE) (English) FIDELITY WORLDWIDE INVESTMENT, INVESTMENT DIRECTOR, TOM STEVENSON, SAYING: "When President Francois Hollande was elected in 2012, the unemployment rate was 9.3 per cent and he made a very clear commitment to the French people that he would reduce unemployment. He's actually failed to do that - unemployment has actually risen in the last four years - so I think it will be a big factor in the election." A stronger German economy is seen safeguarding Chancellor Merkel's position. But with uncertainty building on Trump, some question whether she too can remain weatherproof.

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Euro zone maths: Trump + data = uncertainty

Thursday, November 17, 2016 - 01:37