Eurozone inflation rises again.

The euro has weakened continuously, marking its largest monthly drop in a year, down approximately 3% since the beginning of November. This decline is fueled by concerns over U.S. tariffs, as additional duties on imports loom, alongside weak Eurozone growth. Both manufacturing and service activities show continued signs of deceleration. Political instability in Germany and France further exacerbates market anxiety, coupled with investors’ expectations of future interest rate cuts.

The pressure on the euro has made it the weakest currency among the G10 currencies. Investors speculate that the European Central Bank (ECB) will continue to lower interest rates. Additionally, the effects of U.S. tariff policies, which impact other countries’ currencies, add to the euro's decline. Despite Eurozone inflation rising to 2.3% in November, core inflation remains steady at 2.7%, reinforcing expectations of further ECB rate cuts. Policymakers are divided on this issue, though most agree that rate cuts may be necessary while closely monitoring potential inflation rebounds.

Consumer confidence in the Eurozone dropped by 1.2 points to -13.7 in November, worse than the market forecast of -12.4. The index remains below the long-term average, reflecting significant concerns over overall economic conditions and household financial outlooks. This is partly due to potential inflation increases under Donald Trump's policies and historically high interest rates.

Household lending grew by 0.8% year-on-year, reaching €6.907 trillion in October, accelerating from 0.7% in the previous month. This marks the fastest credit growth since 2023. Meanwhile, corporate lending increased by 1.2% to €5.159 trillion. Overall, private sector lending, encompassing households and non-financial companies, grew by 1.6% in October. The growth in credit to both households and the private sector indicates a positive debt repayment capacity.

Annual inflation in the Eurozone rose for the second consecutive month to 2.3% in November, up from 2% in October, aligning with market expectations. The increase in year-end inflation is attributed to base effects from last year when energy prices dropped sharply. Energy prices have now fallen by 1.9%, while non-energy industrial goods costs increased by 0.7%. However, service sector inflation slightly slowed to 3.9%. Core inflation, excluding volatile food and energy prices, remained steady at 2.7% from the previous month.

The Eurozone Economic Sentiment Index increased by 0.1 points to 95.8 in November, exceeding market expectations of 95.1. This improvement reflects a recovery in industrial confidence and higher retail sales, supported by increased spending capacity in both the private and household sectors. This trend may boost corporate profits despite rising labor and raw material costs.