Eurozone Inflation Preview: Core CPI above 1% to please EUR/USD buyers
|Eurozone CPI will likely exceed original estimates and rise more than 0.1%, leaving the focus on Core CPI. An increase beyond 1% would boost the euro, which benefits from a positive bias, FXStreet's analyst Yohay Elam.
Key quotes
“The focus for the upcoming release is on Core CPI. Germany and Spain did not publish underlying inflation figures, which are projected to hold at 0.9%. The increase in headline raises the chances for a run above 1%. That would still be far from the bank's ‘2% or close to 2%’ target – but would be welcome by the Frankfurt-based institution. It would reduce the chances for a rate cut by the ECB – whose deposit rate is already at -0.50%.”
“Any increase above 1% would boost the common currency, and now has higher chances of happening. A disappointing rise of 0.8% yearly or less would weigh on the euro while if Core CPI meets economists' expectations with 0.9%, EUR/USD may still edge higher.”
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