As the ECB decision turned out to be a non-event as expected - the Bank left monetary policy settings unchanged and the statement saw only minor changes. Only minor moves could have been spotted on the markets in the aftermath of the announcement. Attention of EUR traders now turns to the German flash CPI release for October. Report from Spain released this morning showed massive acceleration from 4.0% to 5.5% YoY (exp. 5.4% YoY). CPI data from German lands also showed an acceleration, although not as rapid as Spanish data. In most cases data from lands showed price growth accelerating to above 4.5% YoY. Having said that, the median estimate for German reading at 4.4% YoY started to look conservative. Actual data showed beats on both annual and monthly basis.
German CPI data for October
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Year-over-year: 4.5% vs 4.4% expected (prev. 4.1%)
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Month-over-month: 0.5% vs 0.4% expected (prev. 0.0%)
On a year-over-year basis German CPI inflation in October reached the highest level since late-1993. However, even an acceleration in price growth in major European economies is unlikely to change the ECB's approach. The Bank noted in today's decision that inflation may overshoot target for a transitory period. ECB is in wait-and-see mode and rate hikes remain years away.
EURUSD jumped in a knee-jerk move following the ECB decision announcement before erasing all of the gains later on. Main currency pair pulled back slightly following the release of the German CPI data but the scale of moves was very small. EURUSD continues to trade in a short-term 1.15875-1.16200 range.
EURUSD dropped slightly after German CPI data for October. Source: xStation5
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