BREAKING: EUR ticks higher after lower-than-expected German CPI

The German flash CPI inflation report for April was released today at 1:00 pm BST. Median consensus pointed to a small down-tick in the headline measure, from 7.4% YoY in March to 7.3% YoY in April. Expectations for a drop were reinforced by state-level readings released throughout the day as almost all showed deceleration in annual inflation rates compared to March. State-level data even hinted that pan-German reading may come in lower than expected and this was the case with German CPI dropping from 7.4 to 7.2% YoY in April.

German, CPI data for April

• CPI inflation:  7.2% YoY vs 7.3% YoY expected (7.4% YoY previously)
• HICP inflation: 7.6% YoY vs 7.8% YoY expected (7.8% YoY previously) 

German state-level CPI readings for April:\

• North-Rhine Westphalia: 6.8% YoY vs 6.9% YoY previously
• Hesse: 6.9% YoY vs 7.1% YoY previously
• Bavaria: 7.2% YoY vs 7.2% YoY previously
• Brandenburg: 7.6% YoY vs 7.8% YoY previously
• Baden Wuerttemberg: 7.3% vs 7.8% previously
• Saxony: 7.6% YoY vs 8.3% YoY previously

Reaction of the market was somewhat puzzling as the reading can be seen as dovish in terms of ECB policy moves. Nevertheless, EUR ticked higher while DE30 moved lower. Scale of the moves, however, was very small.