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Euro-zone sees deeper deflation: -0.6%, core only +0.5%

Deeper deflation in the euro-zone: prices fell by 0.6% y/y, worse than expected but not extremely surprising after the German data. Perhaps even more worrying for Draghi and co. is the core number: a rise of only 0.5%, worse than expected and a new record low – the lowest since July 2007. The unemployment rate dropped to 11.4%.

EUR/USD is trading around 1.1320. It is important to remember that the QE cat is already out of the ECB sack, so these numbers,  bad as they can be, have less of an impact.

The euro-zone was  expected to report a deeper fall in prices: 0.5% in January after 0.2% in December. Oil prices are certainly a major factor. Core CPI, which  excludes volatile  components such as oil prices, carried expectations for an annual rise of only 0.6%, lower than 0.7% in December.

EUR/USD was slightly lower before the publication: 1.1310.

The unemployment rate was predicted to remain unchanged at 11.5%.

Earlier, Spain reported an annual drop of 1.4% in prices while enjoying good GDP growth.

Yesterday, Germany surprised with a drop of 0.5% in annualized prices, putting the largest European economy  also in deflation.

Deeper deflation justifies the big QE program that the ECB presented last week, a program  Germany opposes.

Later we have  important US data.

See how to trade the US GDP with EURUSD

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.