Euro Area inflation hits a record high

London (Nov 30)  The Euro Area inflation print for November hit 4.9% to print higher than analyst expectations. This data comes ahead of the next General Council meeting on 2nd December with the next rate decision on 16th December. The current stance from the ECB suggests the bank is sticking with the inflationary stance believing that current cost pressures are transitory. Just today ECB's Weidmann said the ECB should be wary of any pressure to maintain loose policy longer than inflation dictates. Jens Weidmann, who will step down at the end of the year, has already voiced some concern, saying it's possible the euro-area pace will remain above the ECB's 2% target in the medium term.

There has been a move higher in the EUR/USD pair but no real move in the German 10 year Bund yield. Moves higher have recently been caped by the divergence between Fed and ECB central bank policy. The Fed is still expected to raise rates sooner than the ECB but U.S. money markets pushed back Fed Rate hike expectations. Now the futures markets have fully priced in a 25 bps rise in September 2022 vs July last week. The next resistance in the pair on the 4-hour chart below is at 1.1525 but ahead of that the 200 period moving average could be first up.

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