Good morning all.

Mike had the German regional CPI data today and the last one (North Rhine) is in also. The yearly numbers are looking very weak indeed and as we’ve see the euro is reacting. Here’s the summary of the year on year data:

  • Saxony 0.8% vs 1.3% prior
  • Brandenburg 0.8% vs 1.3% prior
  • Hesse 0.7% vs 1.3% prior
  • Bavaria 0.6% vs 1.0% prior
  • Baden Wuerttemberg 0.8% vs 1.4% prior
  • North Rhine Westphalia 1.1% vs 1.7% vs prior

That leads us into the main German numbers later at 13.00 (gmt+1) and there’s only a slight drop expected in the HICP to 1.0% from 1.1% prior and 1.1% expected from 1.3% prior in the CPI. Going on the regionals the market may have adjusted those expectations downwards.

While EUR/USD is currently sliding down through 1.3600 we need to remember that the ECB is mainly going to be acting on their staff projections for inflation over the medium term. To that extent it may not matter what these numbers, and the eurozone HICP tomorrow, say.