Flash CPI figures for February from the European Monetary Union (euro area) were released at 10:00 am GMT today. German print released yesterday showed an upside surprise - German price growth stayed unchanged at 8.7% YoY in February in spite of expectations for deceleration to 8.5% YoY. This led some to believe that an upside surprise in EMU data may be on the cards.
This was indeed the case as headline EMU CPI came in at 8.5% YoY - a slight slowdown from 8.6% YoY in January but higher than 8.3% YoY expected. Core gauge also surprise to the upside with an unexpected acceleration to 5.6% YoY. Italian CPI reading that was released simultaneously, also came in above expectations with headline price growth slowing from 10.0 to 9.2% YoY, instead of an expected 8.9% YoY.
Euro area
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Headline: 8.5% YoY vs 8.3% YoY expected (8.6% YoY previously)
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Core: 5.6% YoY vs 5.3% YoY expected (5.3% YoY previously)
Italy
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Headline: 9.2% YoY vs 8.9% YoY expected (10.0% YoY)
In spite of a clearly hawkish reading, market reaction was muted. EURUSD jumped in a knee-jerk move before pulling back while DE30 moved around 0.2% following the release. Ultimately, DE30 trades slightly lower following the release while EURUSD trades little changed compared to pre-release levels.
EURUSD trades little changed following hawkish flash European CPI reading for February. Reaction on stock markets was muted as well. Source: xStation5
