EUROPEAN INFLATION: EZ HICP Firmer in January But Some Services Progress
Eurozone January flash HICP inflation came in slightly above consensus at 2.5% Y/Y (2.4% cons and prior) with Italy seemingly behind the surprise (released simultaneously at 1.7% Y/Y vs 1.4% cons). On a monthly basis, Eurozone inflation came in at -0.3% (-0.4% cons; 0.4% prior). However, the data on services in the release should be seen as a rather good sign regarding incoming disinflation.
- On an unrounded basis, HICP was 2.52% Y/Y and -0.28% M/M.
- Core HICP also printed slightly above consensus, at 2.7% Y/Y (2.6% cons but almost rounded to 2.7%; 2.7% prior; unrounded: 2.69% Y/Y, -0.96% M/M).
- Looking at the individual categories:
- Services inflation decelerated to 3.9% Y/Y (4.0% prior), which appears to be broadly what analysts expected. Sequential services inflation of -0.2% M/M is still stronger than what we'd typically see for a January in a pre-pandemic setting but nevertheless the softest January since 2020 - see chart. On first sight, this should be a good sign re the so-called January reset effect (see our HICP preview for background info), but we will have to await the final data for full details here.
- Energy accelerated as expected, to 1.8% Y/Y (0.1% prior) on the back of a 2.9% M/M sequential jump.
- Non-energy industrial goods inflation meanwhile remained at 0.5% Y/Y amid a seasonally driven -2.4% M/M sequential print.
- Food, alcohol and tobacco inflation decelerated a bit, to 2.3% Y/Y (2.6% prior).
- Looking at the national-level prints, headline HICP inflation accelerated in 10 countries in January vs Dec.
- Updated category weightings will be published alongside the final release on February 24.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGB TECHS: (H5) Returns Lower
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 144.48/146.53 - High Nov 11 / High Aug 6
- PRICE: 142.12 @ 15:01 GMT Jan 03
- SUP 1: 141.65 - Low Dec 30
- SUP 2: 141.56 - 1.764 proj of the Aug 6 - Sep 3 - 9 price swing
- SUP 3: 141.05 - 2.000 proj of the Aug 6 - Sep 3 - 9 price swing
Markets slipped on the hawkish Fed and are yet to fully recover, touching 141.65 on the way lower. Medium-term trend signals on the continuation chart continue to point south. A resumption of the trend would pave the way for a move towards 141.56, a Fibonacci projection point on the continuation chart. A stronger recovery would open 144.48, the Nov 11 high. Further out, key resistance is at 146.53, the Aug 6 high (cont).
USDCAD TECHS: Bull Flag Highlights A Clear Uptrend
- RES 4: 1.4669 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4392 @ 15:50 GMT Jan 3
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4307/4232 20-day EMA / Low Dec 17
- SUP 3: 1.4136 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD is unchanged and bulls remain in the driver’s seat. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4307, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Southbound
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6408 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6247/6282 High Dec 30 / 20-day EMA
- PRICE: 0.6204 @ 15:21 GMT Jan 3
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the pair continues to trade closer to latest lows. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6282, the 20-day EMA.
