Eurozone Flash CPI Reaches 5.8%, Core CPI 2.7% as Oil Breaches $110

[MongiIG]

RISING ENERGY COSTS CONTINUE TO IMPACT INFLATION DATA

The flash estimates for CPI data in February

• Inflation Rate YoY = 5.8% vs 5.4% Expected
• Core CPI = 2.7% vs 2.5% Expected

Customize and filter live economic data via our DaliyFX economic calendar

 

The ECB continues to grapple with the idea of raising rates in 2022 despite previously anticipating the first hike in 2023. The February meeting of the Governing Council was perceived as rather hawkish by market participants as the door was left open for a potential hike in Q4 of 2022. Since then, the Euro outlook has ben muddied by the invasion of Ukraine and the potential impact it could have on the Eurozone for the remainder of the year.

 

EUR/USD SELL-OFF AS GERMAN BUND YIELDS PLUMMET

Yesterday saw the largest drop in recent years as the 10-year Bund yield sank more than 23 basis points; while the Euro weakened against the U.S. dollar as markets repriced the likelihood of Eurozone rate hikes in 2022 amidst the current geopolitical uncertainty.

EUR/USD Daily Chart

Source: IG, prepared by Richard Snow

EUR/USD Since the Release

Unsurprisingly, the hot inflation data did little to the currency pair and the shorter term downtrend continues. There was a slight move higher in anticipation of the data which appears to be nothing more than a pullback.

EUR/USD 5 Min Chart

Source: IG, prepared by Richard Snow

Next Major ECB Meeting:

• ECB Governing Council Meeting on the 15th of March

 

 

 

--- Written by Richard Snow for DailyFX.com. 2nd March 2022