Italian and Eurozone Inflation Deliver Strong EUR Support

It was a quieter start to the day on the economic calendar. Early in the European session, prelim January inflation figures for Italy and the Eurozone were in focus.

Eurozone Inflation

In January, the Eurozone’s annual rate of inflation picked up from 5.0% to 5.1%. Economists had forecast a softening to 4.4%. Month-on-month, consumer prices rose by 0.3% following a 0.4% increase in December.

According to Eurostat,

• Energy is expected to have the highest annual rate in January (28.6%, compared with 25.9% in December).
• Food, alcohol, & tobacco also contributed to the upswing (3.6%, compared with 3.2% in December).
• Prices for services remained stable, while non-energy industrial goods dragged (2.3%, compared with 2.9% in December).

Italy’s annual rate of inflation accelerated from 3.9% to 4.8% in January, according to prelim figures. Month-on-month, consumer prices jumped by 1.6% in January, following a 0.4% rise in December.

Market Impact

Ahead of today’s stats, the EUR had fallen to a pre-stat and current day low $1.12668 rising to a pre-stat high $1.12944.

In response to today’s prelim inflation figures, the EUR rose to a post-stat and current day high $1.13050 before falling to a post-stat low $1.12900

At the time of writing, the EUR was up by 0.20% to $1.12937.

Next Up

U.S ADP nonfarm employment change figures for January. With the markets focused on FED monetary policy, the markets will consider today’s numbers as a precursor to the official NFP figures on Friday.