Downward Revision For Euro Area Outlook

The European Commission has opted once again to cut its own 2016 forecasts for inflation and growth in the Euro Area during its winter economic meeting. Brussels announced a revision lower of its inflation forecast to 0.50% for 2016 after anticipating 1.00% in the prior meeting conducted during November. Risks to the economic outlook are mounting as falling oil prices, slowing momentum in emerging and additional possible rate hikes from the United States cloud visibility. The EU Commission also reduced growth estimates for the year to 1.70% from the initial 1.80% while leaving forecasts for 2017 unchanged at 1.90% with inflation anticipated to experience a pick up to 1.70%. ECB President Mario Draghi stated on Thursday, that inflation is being held back by conspiring forces in the global economy while reiterating that policymakers will consider raising rates once inflation nears to 2.00%.

Unemployment claims in the United States increased to 285,000 for the week ending January 30^th according to the latest report from Department of Labor.  Individuals filing for unemployment benefits rose from the previous week’s revised 277,000 while also missing estimates of 280,000. The Labor Department stated that claims are still below the 300,000 level consistent with a healthy labor for the 48th consecutive week while also highlighting that unemployment claims in Oklahoma were estimated due to a glitch in their computer system. The 4-week average also climbed, rising to 284,750 compared to the previous week’s revised 282,750. The labor market appears to be losing momentum amid more tepid growth, reflected recently by early estimates of fourth quarter GDP that underlined an ongoing deceleration in economic activity. The US dollar continued to weaken against peers, pushing gold to new multi-month highs.