Euro-area CPI Estimate Drops To 0.6% In March

Euro-area CPI Estimate Actual 0.6%, Expected 0.7%, Previous 1.2%

Release Explanation: CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore give 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: After rising in February for the first time since June 2008, the Euro-area Flash CPI continued its downward path in March. Until now, the declines in the CPI read were led by the crude oil sub-index, but the Flash estimate does not provide a detailed breakdown of the CPI’s components.

Currently, estimates are that the CPI read is heading even lower. European officials have said a number of times that they do not expect to see deflation in the Euro-area, but do expect very low reads. This Thursday, the ECB is expected to reduce the overnight lending rate by 50 basis points, down to 1.00%

Forex Technical Reaction: The euro had a weak reaction to the CPI report, but touched the highest value seen since the European session started just ahead of the release.

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