- Mario Draghi, ECB President
Persistently low inflation has been the main topic for discussion during the last several months. Inflation has become a benchmark for central bank's forward guidance, the same as unemployment rate did in the U.K. This year fears about another rate cut and the implementation of the negative deposit rate were raised once again, however, stronger-than-expected German GDP as well as positive set of data released on Friday are diminishing concerns about the adjustment of the ECB's monetary policy this week.
A report from the Eurostat showed consumer prices in the 18-nation bloc advanced 0.8% this month. That was exactly the same rate as in January and December, and above market's estimates for a 0.7% figure. Some analysts even believed the CPI could fall to 0.6% or even 0.5% over the observed period, as inflation in Germany fell short of forecasts both on a monthly and yearly basis. At the same time, the core measure jumped 1% accelerating from 0.8% a month earlier. Another sign the economy has stabilized is the resilience of the labour market, as unemployment rate remained unchanged at 12% in January.
Following a release of the data the single currency soared 0.46% against the buck hitting 1.3803, marking the highest level since the year started and suggesting even strongly bearish market sentiment will not be able to hold pair's appreciation.
© Dukascopy Bank SA