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Prior +2.9%HICP +2.4% vs +2.5% y/y prelimPrior +3.0%The numbers here are slightly softer than what the initial estimates indicated. And they reflect a material decline in headline annual inflation to start the new year.That being said, core prices still represent the most important detail in this report and it is the one thing that the ECB focuses on the most. In that regard, core annual inflation in Spain is seen keeping steady in January at 2.6%. That is unchanged from what we saw in December.As such, core inflation is telling the story that price pressures in Spain are still holding up and keeping above the 2% threshold. That will keep policymakers at the central bank guarded with the story in Germany also shaping up to be a similar one.
This article was written by Justin Low at investinglive.com.
đź’ˇ DMK Insight
Inflation data just came in softer than expected, and here’s why that matters: The decline in headline annual inflation to 2.4% from 3.0% signals a potential easing in monetary policy, which could impact interest rates and, consequently, forex and crypto markets. Traders should focus on core inflation, as it remains a critical indicator for central bank actions. If core prices continue to show resilience, we might see volatility in the dollar and risk assets. Additionally, this could lead to a shift in sentiment among institutional investors, who often react to inflation trends. Keep an eye on the upcoming economic indicators, especially any shifts in the Federal Reserve’s stance. If inflation pressures ease further, we could see a bullish trend in equities and cryptocurrencies, while the dollar might weaken. Watch for key levels in the USD index and major currency pairs, as well as crypto assets that are sensitive to macroeconomic changes. The next few weeks will be crucial for positioning ahead of potential market shifts.
đź“® Takeaway
Monitor core inflation closely; if it remains stubborn, expect volatility in the dollar and risk assets, particularly in the next few weeks.
