Summary:

• German flash CPI Y/Y: 1.4% vs 1.5% exp and 1.6% prior
• HICP Y/Y 1.2% vs 1.3% exp and 1.4% prior
• Euro remains slightly higher on the day

The latest inflation figures from Germany have shown a slightly larger than expected drop, with both the flash CPI and HICP numbers coming in below forecasts. The flash CPI Y/Y fell to 1.4% from 1.6% previously, with the drop a little bigger than the 1.5% print expected. 

 The latest decline in German inflation could be seen to weigh on the Eurozone wide figures due out tomorrow morning. Source: XTB Macrobond

The flash CPI figures are often overlooked by analysts and traders who choose to focus more on the HICP reading, but for this latest release the story is one and the same. The Y/Y HICP readings showed a print of 1.2% against consensus calls for 1.3% and a prior reading of 1.4%. 

Despite the slightly soft readings the Euro remains a little higher on the day overall. Rising against all of its peers, albeit in a measured manner, barring the NOK, USD and CHF. The biggest gains can be seen against the CZK and SEK, with the Euro appreciating around 0.3%. 

 The EUR remains higher on balance on the day despite the softer data. Source: xStation

The markets are now awaiting Fed chair Powell, with a pre-released text of his speech due out imminently. The speech will be delivered at 3PM to Congress before he will face some questions. This could well be the main driving force for the EURUSD for the rest of the day.