EUR traded flat and mixed against most of its major rivals in the European session on Friday as investors digested the euro area preliminary CPI data for November.
Eurostat reported its flash estimates revealed the Eurozone’s consumer price index (CPI) increased 2.3% YoY this month, accelerating from 2.0% YoY in October. This represented the highest annual inflation rate since July but was in line with economists’ forecasts. The November gain in the headline indicator primarily reflected base effects in energy prices and elevated growth in services costs. The core CPI, which excludes volatile food, energy, alcohol and tobacco prices, rose by 2.7% YoY, the same pace as in the previous month. Economists had expected the core measure to jump by 2.8% YoY.
Meanwhile, the ECB’s survey of the region’s customers revealed that their one-year-ahead inflation expectations rose slightly in October - to 2.5% YoY from 2.4% YoY in September. This marked the first increase in nine months.
Today's inflation data did not cause a noticeable recalibration of the ECB’s rate cut expectations as markets did not believe that the November uptick in the Eurozone inflation would be enough to convince the region’s central bank to refrain from another rate decrease next month amid overall economic gloom.
Against JPY, the single European currency fell by more than 1%, as the Japanese yen saw broad-based strength as bets for the December interest rate hike by the Bank of Japan heightened after a hotter-than-anticipated Tokyo inflation report.