German states' CPI readings for June earlier showed slightly stronger price pressures than what was reported in May
- Saxony June CPI +0.5% vs +0.3% m/m prior
- Bavaria June CPI +0.4% vs +0.1% m/m prior
- Brandenburg June CPI +0.5% vs +0.3 m/m prior
- Hesse June CPI +0.1% vs +0.4% m/m prior
- North Rhine Westphalia CPI +0.2% vs +0.2% m/m prior
The expectation for the national release later at 1200 GMT is for annual inflation to hold steady at +1.4% y/y, similar to that of May. However, the state readings above have so far seen their respective annual inflation readings to be higher than the previous month and that puts a slight upside bias to the national figures later.
As an aside, just be aware that earlier in the Saxony report we saw that core inflation actually ticked significantly higher in June:
That also sets up an upside bias for the Eurozone core reading - which the ECB is focused on - that will be released tomorrow. The euro did get about a 10 pips bump from the Saxony report earlier but I reckon there's potential for a little bit more of a bigger move tomorrow if the Eurozone figures surprise to the upside.
The current expectation is for core inflation to improve to +1.0% y/y in June from +0.8% y/y in May for the Eurozone report. I reckon anything above +1.2% y/y will give the euro an added lift in trading to end the week if it does print that way tomorrow.
