Today’s consumer price index (CPI) out of the euro zone affirmed the stable growth in prices among the members of the European Monetary Union (EMU). Regional CPI was on target with 2.8% growth, year-on-year, and its core counterpart was partially above forecasts with a 1.6% growth reading.
Traders have been pulling away from the EUR these two weeks after remarks by the European Central Bank (ECB) left many speculators uncertain about the timing of the next interest rate hike. The result of this uncertainty has been for the EUR/USD to push back towards 1.40 in today’s early trading.
Steady inflationary figures, with growth mildly above expectations, is one means of pressuring the ECB to consider lifting rates and thereby tightening its monetary policy. Traders involved in the forex market appear to have been hesitant to push the EUR outside of its bullish channel against several currencies, but this week’s early movements may prove to be a breaking point for the 17-nation common currency.
The euro will be strangely absent from the economic calendar this week, but Friday will see the publication of Germany’s producer price index (PPI). This figure will reveal another aspect of the inflationary levels in the region, but so far this week the EUR remains bearish.
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