Eurozone Preliminary CPI drops 0.2% YoY in August vs. +0.2% expected, EUR/USD unfazed

According to Eurostat’s flash reading of Eurozone CPI report, the annual reading came in at -0.2% in August, meeting expectations of +0.2% and +0.4% previous.

In July, the headline inflation recovered from a four-year low hit in June, in the face of the coronavirus pandemic.

Meanwhile, the core figure rises to +0.4% in the reported month when compared to +0.9% expectations and +1.2% previous.

Key details (via Eurostat)

“Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in August (1.7%, compared with 2.0% in July), followed by services (0.7%, compared with 0.9% in July), non-energy industrial goods (-0.1%, compared with 1.6% in July) and energy (-7.8%, compared with -8.4% in July).”

The Eurozone inflation report comes a day after the German Prelim CPI data was released, which showed that the German consumer price inflation showed -0.1% in July and moved further away from the European Central Bank’s (ECB) rate target of just under 2% for the Eurozone as a whole.

Separately, the bloc’s Unemployment Rate for July ticked higher to 7.9% vs. 8% expected and 7.7% last.

FX implications

The deceleration in the headline Eurozone inflation figure fails to deter the EUR bulls, as EUR/USD trades with 0.31% gains at 1.1971. The spot hit fresh 2020 highs of 1.1998 earlier on in the Asian session.