Euro-zone inflation dropped to 0.3% and core inflation to 0.7%. While the first number is within expectations, it is a drop from last month, and the second number is a clear disappointment. The core figure is the lowest seen in this cycle, matching similar falls in the past.
EUR/USD confirms the break below critical support at 1.2660 and trades now below 1.2630. The euro is also falling against other currencies, and reaching a long term low against the pound. The ECB can be pleased with the fall of the euro, but should certainly be worried that inflation is not picking up.
More: EUR/USD falls below 1.26 – 4 reasons
Update: the fall intensifies and 1.26 is hardly holding. The new low is 1.2601.
The euro-zone’s preliminary Consumer Price Index (CPI) for September was expected to stand at 0.4% year over year, just like the revised figure for August. Core CPI was predicted to rise by 0.9% y/y, exactly like in August. However, the lower value of the euro during the month could already be reflected in the value of the pair.
EUR/USD fell to a 2 year low just before the publication, losing 1.2660.
More:Â EUR/GBP approaches post crisis low on weak euro-zone inflation data
The unemployment rate was expected to remain unchanged at 11.5%. At the same time, Italy also published its CPI data. Both figures came out as expected. The euro-zone unemployment rate refers to August.
Mixed data came out of Germany earlier in the day: retail sales jumped by 2.5%, much better than expected, while the number of unemployed rose by 12K, worse than expected.
