Euro Slightly Higher on CPI Uptick, March Still in Focus
- The Euro traded slightly higher versus other major currencies
- Headline CPI at 0.4%, Core CPI Printing 1.0%
- ECB March policy meeting still in focus
The Euro traded slightly higher versus other major currencies (at the time this report was written) after the Euro-Zone’s Consumer Price Index (CPI) figures released today showed inflation accelerated in January. The preliminary headline reading showed consumer prices rose an annual 0.4% in January, which was in line with expectations, and above the prior 0.2% reading. Core CPI which strips out volatile elements like food and energy prices printed 1.0%, above the prior and expected reading of 0.9%.
Whilst the numbers today showed a slight acceleration in the Euro-Zone's inflation, the data came generally in line with expectations, as supposedly technical effects from a drop in oil early last year faded from the 12-month figure. With that being said, the uptick in Core CPI may have been a slight relief for the ECB who are seeing stimulus efforts falling short from their medium-term inflation target of just under 2%. In their latest policy meeting, the ECB opted for status que and kept rates unchanged, but rhetoric by ECB’s President Mario Draghi sent the Euro lower on the perceived possibility of lower rates at the March meeting, when new macroeconomic projections become available. Taking this into consideration, today’s figures were on the positive side, but seemed to do little to sway the market sentiment regarding a possibility for lower rates down the line and the Euro only saw a slight positive reaction.
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