Market Spotlight: EZ Inflation Falls Further But No ECB Shift Expected Near-Term
EZ CPI Cools Again
The latest eurozone inflation data seen today has fuelled hopes that the inflationary spiral which ballooned last year, is now passing. Eurozone CPI was seen cooling to 9.2% last month, down from 10.1% the prior month, falling below the 9.6% result the market was looking for on the headline reading. While core inflation was a little stickier, rising to 5.2% from 5% prior, above the 5.1% forecast, the overall response to the data has been positive, suggesting that inflation in the eurozone has now peaked. Additionally, retail sales in the eurozone were seen rising unexpectedly to 0.8% from the prior month’s -1.5% reading, coming in above the 0.5% level forecast.
ECB Unlikely to Shift Near-Term
In all, today’s data out of the eurozone is encouraging to say the least. However, with inflation still well above the ECB’s 2% target, there is little to suggest that bank will slow the pace of its tightening program ahead of current projections. Earlier this week we heard ECB’s Villeroy warning that eurozone rates likely wont peak until the summer at least, cautioning that the duration of rates would matter more this year than the levels themselves.
EUR Well Bid, EZ Stocks Mixed
The market reaction has seen EUR well bid against most of its major trading counterparties. European stocks have been a little stickier with the Dax and the Eurostoxx both treading water, though the CAC40 has seen better demand on the back of the data.
Technical Views
EURGBP
The pair is now testing the upper limit of the .8597- .8869 level range which has framed price action over the last four months. If bulls can break the current resistance, the path is open for a move higher towards the .9276 level longer term. To the downside, .8719 is the main support to note ahead of the range bottom.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.