All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

German CPI Surprisingly Hot As Euro Recovers Losses

Last updated 9/28/2011 4:08 AM ET (GMT -5) 0 Comments - Add your comment

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

Consumer prices in the state of Saxony  rose at faster pace than forecast increasing by 0.3% versus -0.1% eyed, suggesting that price pressures in Europe’s largest economy remain elevated. On a year over year basis prices rose at 2.6% - above ECB’s target of 2.0%. Saxony is the first of six German states to report CPI data today.

Oil and energy prices were the primary causes of the rise in the CPI which otherwise would have printed at a more modest 0.1%. Nevertheless, the news on the consumer front contrasts sharply with the recent wholesale data which has shown which has show negative month over month reading.

The Saxony CPI report recorded the highest yearly change in inflation since 2008 and may halt any  discussion of a possible rate cut from the ECB before the year end. Some analysts have speculated that  the ECB may reverse course when Mario Draghi takes helm of the central bank next month. However we believe that Mr. Draghi will want to emphasize policy continuity and given today’s inflation data will be even less inclined to make any sudden changes at teh start of his term.

The EUR/USD rose in early European trade, reversing losses incurred in Asia as  positive risk flows and key Greek parliamentary approval of austerity budget measures eased investor concerns about imminent Greek default of its sovereign debt.  The pair continues to trade in wide 1.3400-1.3700 range as currency traders continue to focus on the sovereign debt story and with no further economic data on the docket, risk appetite and headline flashes on Finnish approval of the expansion of the EFSF will likely drive trade today.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

Loading...

About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.