Today’s regional inflation reports from Germany show a lower inflation dynamics in the biggest economy in Europe. This trend stands for other countries as well.

Saxony May CPI was -0.1 percent m/m, Brandenburg May CPI was -0.1 percent m/m, Bavaria May CPI was -0.1 percent m/m, Hesse May CPI was 0.0 m/m percent, North Rhine Westphalia May CPI was -0.2 percent m/m and Baden-Wuerttemberg May CPI was -0.1 percent m/m. Those numbers are lower than previous reports suggesting a drop in German inflation below 2 percent. Consensus for this data is 1.6 percent year on year and -0.1 percent month on month compared with April numbers at 2 percent y/y and 0.0 percent respectively.

Along German detailed inflation reports showing slower inflation dynamics, Spain CPI dropped to 1.9 percent year on year versus 2.1 percent y/y expected, previously 2.6 percent y/y.

Weaker inflation reports suggests that European Central Bank will likely do not have any reason to change its monetary policy course. Markets anticipated that on the next meeting, ECB will change its monetary policy outlook, but yesterday’s Mario Draghi’s hearing in the European Parliament and today’s data likely eliminates this possibility.

 Despite weaker inflation reports, EURUSD managed to reverse its decline during Asian session, after reaching to the 1.1115-1.1075 support zone, bounced off significantly. Source: xStatnion5