Forex Trading News: European Union CPI Flash Estimate shows inflation still on the rise

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Forex Trading News:  European Union CPI Flash Estimate shows inflation still on the riseVarious data were released today in Europe. CPI Flash estimate gave a reading of 2.8 percent, slightly higher than the expected 2.7 percent, which was the prior revised figure. This gives an indication that inflation in the rose above the ECB target in April, which raises the probability of another interest rate hike in June, despite a weakening of economic sentiment.

Eurostat estimated April consumer prices in the Eurozone moved up to 2.8 percent year-on-year, higher than market consensus of 2.7 percent which was figure unchanged from March. The focus is now on next Thursday’s ECB meeting.

Economic sentiment in the euro zone ticked down for the second month from 107.3 to 106.2 which was below market expectations of a drop to 107.0. All sectors saw a decline in sentiment, except construction. Data showed a decline to -11.6 from -10.6 in March.

Consumer inflation expectations, which have been rising at a fast pace since November 2010, fell marginally lower from 30.8 to 30.7. Selling price expectations among manufacturers also fell to 21.5 from 24.4.

The European Commission’s business climate indicator, which points to the phase of the business cycle, fell markedly for a second month in a row, to 1.28 points from 1.43 in March.

Upon release of the news, EURUSD dropped 5 pips from 1.4857 down to 1.4852. This was short lived, as Euro soon continued its uptrend to hit as high as 1.4868, close to the 16-month high.