Euro zone growth holds steady and inflation pips up, but a surprise fall in German retail sales raises questions over the bloc's recovery. And, as Ciara Lee reports, Japan's latest numbers point to even more weakness as central bank policymakers gather ahead of their policy announcement this week.
Euro zone growth was steady but tepid in the last quarter, according to new data. GDP rose 0.3 percent, the same as in Q2. Year on year the euro zone economy expanded 1.6 percent. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF CURRENCY STRATEGY AT CIBC WORLD MARKETS, SAYING: "Of course there remains underlying headwinds in terms of short-term data releases, and of course we have ongoing political risk in terms of the constitutional referendum in Italy into the start of December and then of course the elections in 2017. But such factors not withstanding, I think there are still some degrees of cautious optimism regarding the European outlook." Inflation picked up in October due to a smaller decline in energy prices, the flash data revealed. But excluding the most volatile prices for unprocessed food and energy, inflation was just 0.7 percent year-on-year, down from 0.8 percent in the previous five months, and a fair way off the ECB's 2 percent target. Even less encouraging - Germany's September retail sales, falling the most in two years, partly thanks to a warm September. But some consider the indicator too volatile. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF CURRENCY STRATEGY AT CIBC WORLD MARKETS, SAYING: "We need to look at broader trends, and of course if there were to be signs that the labour market which has been remarkably robust, and Germany were to start to lose momentum, then perhaps that could be complicit in a more protracted deceleration." Outside Europe, concerns over Japan's recovery. Industrial output stalled in September in a sign the economy may be losing steam due to weak consumer spending and exports. And markets also looking for pointers on policy when the U.S. Fed meets this week. No rate hike is expected until December, but investors will be looking at the language used, particularly with election day just round the corner.