Eurozone Awaits Tense Balance of Growth and Inflation Relief

The European Central Bank (ECB) is taking a cautious approach to inflation and growth in the Eurozone, according to Geoff Yu at BNY. The ECB wants to see a 'Goldilocks' mix of improving activity without reigniting inflation.

Recent preliminary August PMIs indicate a tentative balance between manufacturing intentions and services remaining in moderate contraction. Meanwhile, the ECB's latest inflation expectations survey shows easing.

The upcoming French and Spanish flash Consumer Price Index (CPI) releases on Friday will test inflation relief, with Spain running hotter than France. German unemployment data on the same day will provide a labor-market read for the Eurozone's largest economy.