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

Dhwani Mehta FXStreet

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.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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