EUR/USD Update: Euro Area Inflation Declines for the First Time Since July 2021

[MongiIG]

EUR CPI Key Points:

• Inflation Rate YoY Flash Actual 10% Vs 10.6% October.
• Food, Alcohol and Tobacco Prices Continue to Rise.
• EUR/USD Still Being Driven by the Dollar Index.
• To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section.

Euro Area annual inflation comes in at 10% for November, down from 10.6% in October to post its first decline since July 2021. Energy continues to have the highest annual rate but declined from 41.5% in October to 34.9% in November. Food, alcohol and tobacco prices rose to an annual rate of 13.6% compared to 13.1% in October. Core inflation data which excludes energy, food, alcohol and tobacco was steady and matched estimates with a print of 5%.

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The data coupled with softer readings from Germany, Spain and Belgium will no doubt give the European Central Bank a lot to ponder heading toward its December 15 meeting. Having hiked interest rates 75bp at its previous two meetings the question for markets is whether they are ready to slow the pace down to 50bp (Markets currently pricing in 54bp). Recent comments from ECB President Christine Lagarde would indicate that a slowdown may not be on the cards as Lagarde stated that inflation has yet to peak. ECB policymaker Isabel Schnabel meanwhile recently stated it may be too early to slow down the pace of rate hikes which makes Decembers meeting all the more intriguing.

 

 

Nov 30, 2022 | DailyFX
Zain Vawda, Analyst