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Euro-area CPI Actual 0.6%, Expected 0.6, Previous 0.6%
Euro-area Core CPI Actual 1.8%, Expected 1.6%, Previous 1.4%
Release Explanation: The 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.” TheLFB-Forex.Com Trade Team said
TheLFB-Forex.Com Trade Desk Thoughts: Inflation remained stable in the Euro-area in April, as the Flash CPI forecast. However, the core CPI was higher than expected, 1.8 vs 1.6%. The ECB mandate is to maintain the inflation rate close, but under the 2% benchmark level.
The main components with the highest annual rates in April 2009 were alcohol & tobacco (3.3%) and hotels & restaurants (2.6%), while the lowest annual rates were observed for transport (-3.6%), communications (-1.6%), clothing and education (both 0.7%).
“The CPI is a very important release especially at this point in time. According to the ECB forecast, the CPI is expected to fall below the 0% level in the coming quarter, but this will only happen for a short period. To some extent, the Euro-area CPI has the same behavior as the U.S. or the U.K.’s CPI release, since Core Inflation is picking up, while the main read is heading lower” TheLFB-Forex.com Trade Team noted.
Forex Technical Reaction: The euro rose 20 pips during the news release. However, before the release, the euro lost 80 pips, declining the most among the major pairs against the dollar.