Euro-zone inflation at 0.3%, core at 0.7% – EUR/USD

Headline inflation did not lose its lows and stayed at 0.3%. Core inflation is at 0.7%. Unemployment stands at 11.5%. All numbers are as expected.

Given the German inflation numbers, it seems that it could have been worse. EUR/USD is ticking higher on a minor “relief rally”.

The euro-zone was expected to report a yearly rise of 0.3% in  CPI inflation in the initial read for November after 0.4% in October. Core CPI was predicted to rise 0.7%, just like the previous month. However,  data released from Germany and Spain yesterday was weaker than predicted, probably lowering expectations.  Euro-zone unemployment was expected to remain unchanged at 11.5%.

EUR/USD  traded  under 1.2440 before the publication.

Germany reported an HICP (EU  Standard inflation) of only 0.5% and Spain also shares the same number, but from the negative side: a fall of 0.5% in prices.

0.3% in CPI is the lowest since 2009, and 0.7% in core CPI is the lowest since before the crisis. The lack of agreement to cut oil production by OPEC yesterday pushes oil prices lower and will probably have a negative impact on  headline inflation.

The ECB convenes next week, and expectations are high for an announcement of further details of what the ECB plans to buy,  more specifically, sovereign bonds, or outright QE.

Further:  The Case For Staying Short on EUR Into Next Week’s ECB – BNPP

Here is the chart: