Trading the News: Euro-Zone Consumer Price Index (CPI)

EUR/USD stands at risk of extending the decline from the previous week as the 3Q Euro-Zone Gross Domestic Product (GDP) report is expected to show the economy growing another 2.3%, while the Consumer Price Index (CPI) is anticipated to hold steady at an annualized 1.5% for the third consecutive month in October.

A batch of lackluster data prints may do little to prop up the single-currency as President Mario Draghi & Co. plan to carry the quantitative easing (QE) program into 2018, and the euro-dollar exchange may face a more meaningful correction over the remainder of the year as the Governing Council remains in no rush to move away from its easing-cycle.

However, a series of above-forecast prints may spark a bullish reaction in EUR/USD as it encourages the ECB to adopt an improved outlook for the monetary union. In turn, the central bank may continue change its tune over the coming months as ‘the strong cyclical momentum, as evidenced in recent developments in sentiment indicators, could lead to further positive growth surprises.’

Impact that the Euro-Zone CPI report has had on EUR/USD during the previous release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

SEP

2017

09/29/2017 09:00:00 GMT

1.6%

1.5%

+1

+12

September 2017 Euro-Zone Consumer Price Index (CPI)

EUR/USD 5-Minute Chart

The Euro-Zone Consumer Price Index (CPI) held steady at an annualized 1.5% for the second consecutive month in September, while the core rate of inflation unexpectedly narrowed to 1.1% from 1.2% during the same period. The preliminary reading showed energy prices slowing to 3.9% per annum from 4.0% in August, with the cost for services also narrowing to 1.5% from 1.6%, while prices for Food, Alcohol and Tobacco increased an annualized 1.9% after expanding 1.4% during the previous month. Nevertheless, the initial dip in EUR/USD was short-lived, with the pair climbing back above the 1.1800 handle to end the day at 1.1812.