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Germany’s preliminary CPI read showed a monthly rise of 0.2% and a yearly rise of 1.3% in prices. It was expected to show a rise of 0.1% in its CPI in November, more than a drop of 0.2% seen in October. Year over year, a figure of 1.2% was expected to be recorded for a second time in a row. Low inflation in Germany and in the euro-zone triggered the rate cut in early November, making this release all-important.

EUR/USD traded at around 1.3590 before the release, falling from a new peak of 1.3617 recorded earlier in the day. It is now climbing above 1.36 once again.

While this isn’t a big surprise in absolute terms and especially when taking into account the early publications from the German states, the impact on the euro is significant. The ECB is sometimes criticized for focusing too much on Germany.

Also the HICP numbers came out higher than expected: +0.2% instead of -0.1% m/m and 1.6% instead of 1.3% y/y.

Earlier, the various German states released their initial CPI estimations, and these came out slightly higher than in the previous months.

On the other hand, the all-European M3 Money Supply came out at 1.4%, lower than 1.8% expected. This points to a potential credit crunch. In addition, German unemployment rose by 10K, also more than expected.

For more on the euro, see the EURUSD forecast.