This week the Eurozone’s Purchasing Managers Index data was released showing signs that the optimism across the continent may not be at the level it was towards the end of last year. PMI data across manufacturing was down, showing signs that a slow-up may not be too far down the line.

One of the main factors is the strength the Euro appears to be having on exports. The strong single currency has made products built in the EU more expensive and it was only a matter of time before sales start to decrease. Mario Draghi, the President of the European Central Bank last year raised his concerns about the value of the Euro and it looks as though the could come to fruition.

Inflation Data Tomorrow

The latest Consumer Price Index data for the Eurozone will be released tomorrow, with inflation expected to remain at 1%. After the last 18 months involving pumping huge sums of quantitative easing, the Eurozone economy has grown. However the tightening of monetary policy could have an instant effect on the last 18 months. The European Central Bank want to raise rates but are unable to do so until inflation starts to rise. At the moment there is more chance of inflation falling especially with the risks surrounding the strength of the Euro.

Across the world central banks are starting to raise interest rates with Canada, the US and even the UK considering further rate hikes in the near future. The ECB will need to make sure that they don’t fall behind other economies as investors could look elsewhere for profits. Global growth is expected to rise at 4% this year and the Eurozone would hope to benefit from that. However if the Euro is too strong importers may look to purchase products form elsewhere.