Flash Eurozone CPI accelerated to 1.9% yoy in May, up from 1.2% yoy and came in well above expectation of 1.6%. Core CPI rose to 1.1% yoy, up fro 0.7% yoy and beat expectation of 1.0% yoy. Unemployment was unchanged at 8.5% in April, above expectation of 8.4%.
Reactions in the Euro is relatively muted as the higher than expected inflation was actually expected after upside surprise in both German and French CPI reading. Nonetheless, the solid rebound in inflation in Q2 should have eased much of ECB policy makers’ worries. The data add to the case for completing the asset purchase program this year. The question is whether it would end after September. President Mario Draghi could give some hints at the June 14 press conference.
Overall, Euro continues to ride on easing worries over Italy political turmoil and recovers today. For now, Euro is the strongest one for today, third strongest for the week just after Canadian Dollar and New Zealand Dollar.
Also released in European session, Swiss GDP rose more than expected by 0.6% qoq in Q1. Swiss retail sales dropped -2.2% yoy in April, below expectation of -1.4% yoy. UK mortgage approvals dropped to 62k in April. UK M4 money supply rose 0.2% mom in April.
