The EUR had a better day Wednesday after Tuesday’s rather disappointing price action and is up against the AUD, NZD, CAD, and USD though unable to keep pace with the still-soaring pound. It began to move higher in the European morning after the botched release of German CPI numbers about which an inquest seems to be in progress. The stronger than expected numbers of 1.8% y/y were printed by Bloomberg some 3-4 hours of scheduled release then removed from their system in what was claimed to be either a misprint or a wrongly reported number from one of the German States which report their inflation numbers separately.
Whatever the case, the error became fact at 2pm European time when the 1.8% number was confirmed. Later in the afternoon, Bundesbank President Jens Wiedmann said German economy is roaring ahead and there are no signs that difficulty in forming a government is noticeably affecting business sentiment. Calling German economic growth “exceptionally good”, he said that the expansion would continue for some time, thanks to solid business sentiment and the highest rate of employment since German unification in 1990. “Updated (euro zone) forecasts come out in two weeks, in December as usual, on the basis of detailed country projections… Indications are that the economic outlook will be at least as good (as previously), if not better. Many short-term indicators have surprised positively”. The Bundesbank head, who also sits on the ECB Governing Council, repeated his long-standing criticism of the ECB’s loose monetary policy, saying that a less expansive stance would be justified. “One thing is clear: even after the end of net asset purchases, euro zone monetary policy will continue to be very expansionary”.
The EUR opens this morning around USD1.1850, with AUD/EUR some 25 pips lower at 0.6385 while NZD/EUR at 0.5810 is around 15 pips down from yesterday’s open.