- Both monthly and yearly CPI figures miss estimates.
- Euro slips versus Australian Dollar, US Dollar despite Core unch.
- Likelihood of non-standard easing measures by ECB still low.
The Euro took a knock lower this morning, if only temporarily, as the final February inflation figures showed that the state of disinflation currently gripping the Euro-Zone remains. The data comes in the wake of commentary from European Central Bank President Mario Draghi concerning the impact of the strong Euro on price pressures, which suggested that a further rise in the Euro could be met with action to prevent full-on deflation from setting in.
Here’s the data that initially provoked a downside reaction in the Euro:
- Euro-Zone Consumer Price Index (FEB): +0.3% versus +0.4% expected, from -1.1% (m/m); +0.7% versus +0.8% expected unch (y/y).
- EZ CPI - Core (FEB F): +1.0% as expected unch (y/y).
EURUSD 1-minute Chart: March 17, 2014 Intraday
Charts Created using Marketscope – prepared by Christopher Vecchio
Following the data, the EURUSD dropped from $1.3896 to as low as 1.3883, just above the session low set earlier in the day at 1.3878. However, as the incoming inflation data is very much subject to sustained low non-Core items (energy, food, tobacco), the stronger Euro can be viewed as the culprit for the contained inflation readings.
However, barring a return of the Euro-Zone financial crisis,the probability of any new major non-standard measures has been diminished. The EURUSD was trading at 1.3895 at the time this report was written.
--- Written by Christopher Vecchio, Currency Analyst
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