Monday, January 31, 2011

Euro Rebounds | CPI Data | 31 January 2011

Euro Rebounds | CPI Data | 31 January 2011

The Euro has rebounded strongly today after CPI estimate beat expectations and accelerated to 2.4% in January (year on end). This was the highest level in more than two years.

Based on recent inflation jaw boning from European Central Bank, the stronger than expected inflation reading triggered more speculation that ECB would normalize rates sooner.

The CPI is now above ECB's target of "below 2%, close to 2%" for the second month in a row. Further, there is no sign that is cooling down.

Investors and the markets are expecting a possible rate hike in Q4; however, the ECB might increase the rate sooner if inflation outlook worsens.

Through all this, the EURUSD pair is still below the 1.3757 recent high on concern of continuation of Egypt protest.

January 31, 2010 - by David Frank, Financial Analyst, Ava Fx