Euro-zone CPI was confirmed at 0.6% y/y and 0.8% for the core CPI in November. This was not surprising. A separate publication saw the euro-zone trade balance surplus shrink to 19.7 billion euros, much lower than 25.2 billion predicted. This is data for October.
EUR/USD consolidates its gains, recovering some 50 pips from the lows and battles the key line of 1.0460.
Eurostat was expected to confirm that euro-zone inflation advanced to an annual pace of 0.6% in November 2016, while core CPI remained unchanged at 0.8%. Month over month, the consumer price index carried expectations of slipping by 0.1%.
EUR/USD was making an attempt to recover from the big blows, trading at 1.0460 ahead of the release. 1.0460 was the low level seen in March 2015 and breached yesterday.
The reaction to the FED’s hawkish hike intensified in the morning after the event. The US dollar soared across the board. EUR/USD plunged to as low as 1.0366 before bouncing.
The tightening by the Federal Reserve comes in stark contrast to the loose monetary policy enacted by the European Central Bank. The ECB extended its Quantitative Easing scheme until the end of next year and also removed its limit on buying expensive bonds.
For EUR/USD, there are only two barriers left on the road to parity.
