Currency Note Euro

German inflation data may well disappoint

By Callum Holmes July 30th, 2014

Little data of note was released from the Eurozone yesterday and as a result movements in rates came largely as a result of events elsewhere. The single currency lost further ground against a resurgent US dollar, while seeing movements in both directions against sterling.

The most important data set out in the Eurozone today is set to be the Preliminary German Consumer Price Index (CPI). This is a key indicator of inflation from the largest economy in the eighteen-nation bloc and is forecast to come out around the 0.2% mark. This is still well below the 2% target set by the European Central Bank (ECB) which has been one of the main driving influences behind the euro’s weakness in 2014. Lower-than-expected data will indicate that ECB President Mario Draghi has not succeeded with his recent policy initiatives, whereas higher figures will ease the pressure and may lend some strength to the single currency in the short term. We also expect flash CPI data from Spain today along with Spanish quarterly growth figures. Both have the potential to impact upon the performance of the euro should results differ greatly from forecasts.