FXTRADING Economic Data Summary (Asia-Pacific | 06/12)

ECB Raises Rates to Address Inflation Risks

As widely expected, the European Central Bank raised its key interest rates by 25 basis points, lifting the deposit rate to 2.25% and the main refinancing rate to 2.40%. Policymakers believe that rising energy prices caused by tensions in the Middle East are once again increasing inflationary pressures across the Eurozone. Compared with its previous focus on economic growth, the ECB is now placing greater emphasis on controlling inflation risks.

According to the latest projections, Eurozone inflation is expected to average 3.0% in 2026, before easing to 2.3% in 2027 and 2.0% in 2028. Core inflation is forecast at 2.5% in both 2026 and 2027, declining to 2.2% in 2028. The ECB noted that higher energy costs are gradually feeding into food, goods, and services prices, raising the risk of broader inflationary pressures. FXTRADING believes the rate hike is primarily aimed at preventing rising energy costs from evolving into a more widespread inflation problem. Although economic growth remains weak, policymakers appear more concerned about inflation expectations reaccelerating, suggesting that the policy stance is likely to remain cautiously restrictive in the near term.

U.S. Labor Market Shows Signs of Cooling

For the week ending June 6, initial jobless claims in the United States increased by 4,000 to 229,000, exceeding market expectations of 225,000. Meanwhile, the four-week moving average rose to 219,000, indicating that the labor market is gradually slowing and employment growth has lost some momentum compared with earlier periods.

Continuing jobless claims also increased by 24,000 to 1.795 million, while the four-week average rose to 1.7805 million. Although the overall level remains relatively low by historical standards, the increase in continuing claims suggests that some unemployed workers are taking longer to find new jobs and that employers are becoming more cautious about hiring. FXTRADING believes that while the U.S. labor market remains broadly resilient, recent data point to some marginal softening. If jobless claims continue to rise, market expectations for economic slowing and future monetary policy adjustments may strengthen further.

Germanys Current Account Surplus Continues to Narrow

Germanys current account surplus fell to EUR 13.8 billion in April, down from EUR 18.7 billion in the same period last year. The goods trade surplus declined from EUR 16.4 billion to EUR 13.3 billion. While exports increased 5.2% year-on-year to EUR 120.8 billion, imports rose 9.2% to EUR 107.5 billion, significantly outpacing export growth.

At the same time, the primary income surplus declined from EUR 13.7 billion to EUR 11.0 billion. The services trade deficit narrowed from EUR 6.6 billion to EUR 5.8 billion. During the first four months of the year, Germany‘s cumulative current account surplus totaled EUR 75.6 billion, down from EUR 84.1 billion in the same period last year, indicating a decline in the country’s overall external surplus. FXTRADING believes the narrowing current account surplus is mainly the result of faster import growth, which may partly reflect improving domestic demand. However, with global trade conditions still facing uncertainty, Germanys export outlook remains under pressure, and the current account surplus may continue to trend lower in the near term.

Turkeys Central Bank Leaves Rates Unchanged

The Central Bank of Turkey decided to keep its one-week repo rate unchanged at 37.00%, while maintaining the overnight lending rate at 40.0% and the overnight borrowing rate at 35.5%. The decision was in line with market expectations and suggests that policymakers are not in a hurry to change the current policy direction.

The Turkish central bank stated that its tight monetary policy stance will remain in place until meaningful progress is achieved toward price stability. Policymakers emphasized that future decisions will be made on a meeting-by-meeting basis according to the inflation outlook. If inflation risks intensify again, further tightening remains possible. FXTRADING believes that controlling inflation remains the central banks top priority. Maintaining high interest rates helps stabilize market expectations and support the currency, and monetary policy is likely to remain restrictive until inflation shows a more convincing decline.

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