Trade Desk Thoughts - Euro-Area CPI

Euro-area CPI Actual 3.8%, Expected 3.8%, Previous 3.8%
Euro-area Core CPI Actual 1.9%, Expected 1.7%, Previous 1.7%

Release Explanation: The CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore gives an overall read of Inflationary pressures. It is the most widely used Inflation indicator of Central Banks, Institutions, and Governments. It is used to calculate Cost of Living numbers for Government programs. Each regional Central Bank will have their own CPI Target rate, and each will differ in line with the way they individually want to control the aspects of their own economies.

Trade Desk Thoughts: Inflation in the Euro-area is up 3.8% from one year earlier, in-line with market expectations. The core read, excluding volatile items rose to 1.9%, higher than the expected 1.7%. The highest annual rates were seen in transport and housing, both up 6.3% and food items, up 6.2% from one year earlier. From one month earlier, transport prices fell in August by 1.3%, while food fell by 0.4%. The released number of 3.8% is way above the ECB target of 2% inflation over the medium term.

Forex Technical Reaction: The euro made a 30 pip spike at the time of the release however, the move was quickly retraced. The pair continues to trade in a 50 pip range, established during the European session

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