THE TAKEAWAY: German annual inflation confirmed at 1.7%, 18-month low -> Euro drops to new 2-year low after yesterday’s finance ministers’ meeting
German annual inflation was confirmed to have fallen to its lowest rate since the end of 2010, reaching 1.7% during the month of June. The consumer price index dropped 0.1% in June, making it the second month in a row of declining prices, according to the German Federal Statistics Office.
Energy prices were up 4.0% when compared to June 2011, while food prices were up 3.6%, other areas of household consumption saw an average of a 1.1% annual inflation.
Today’s CPI release confirmed provisional price estimates made at the end of June, and therefore did not affect Euro trading. Yesterday, EURUSD declined to a new 2-year low at 1.2234, following news that European finance ministers failed to deliver any significant results relating to bank recapitalization in their meeting this week. Support can be seen by the 50% Fibonacci expansion from May’s high to the June’s low.