Latest data released by Destatis - 30 January 2019

Germany CPI
  • Prior +0.1%
  • CPI +1.4% vs +1.6% y/y expected
  • Prior +1.7%
  • HICP -1.0% vs -1.0% m/m expected
  • Prior +0.3%
  • HICP +1.7% vs +1.8% y/y expected
  • Prior +1.7%

Slight delay in the release by the source. The headline reading declined more than expected to just +1.4% y/y. That's the weakest reading since February last year. The declining trend in headline inflationary pressures won't bode well for the ECB's outlook to start the year. However, we didn't have the Saxony report today so there's no other indication to identify if the core reading has held steady.

EUR/USD remains rather unchanged around 1.1430 currently as markets are still waiting on the FOMC meeting later today. If inflation readings continue to plummet to start the year, it only builds a stronger case for the ECB to revise its rate guidance in March and that would see the euro weaken slightly in the coming weeks.