Eurozone Inflation Narrowly Avoids Double Digits, ECB Next Week

Euro, Eurozone CPI News and Analysis

• Eurozone CPI Final (Sep) 9.9% vs 10% exp, month on month inflation in line at 1.2%. Core inflation as expected at 4.8%
• EUR/USD little changed, EU Stocks edge slightly higher
• Markets edge towards 75 bps from the ECB next week as officials remain resolute to hike despite economic slowdown

Eurozone CPI Narrowly Misses 10% but Remains Elevated

Inflation continues to be the dominant driver of monetary policy which today’s data has reinforced, as energy (+4.19%) and food alcohol and tobacco (+2.47%) were the standouts as far as price increases are concerned for the month of September.

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While narrowly avoiding the 10% mark for inflation, when compared to September last year, the numbers will certainly reinforce the hawkish sentiment shown by prominent ECB officials lately. Later today, two ECB members Centeno and Visco have the opportunity to have their say on the latest inflation figures as ECB speak is set to die down ahead of the mandatory blackout period ahead of Thursday’s rate decision.

Market Implied Probability of Rate Hikes Next Week

Source: Refinitiv

Market Reaction

The EUR/USD pair was little changed after the data released, continuing the bearish momentum since this morning.

EUR/USD 5-minute chart

Source: TradingView, prepared by Richard Snow

EU stocks 50 witnessed a slight rise, continuing the very short-term lift witnessed ahead of the data.

EU Stocks 50 5-minute chart

Source: IG prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX