Euro dips below 1.10

The Euro has retreated down through the 1.10 mark in today’s trading session after a disappointing round of economic figures has raised doubts on the size of the rate hike the European central bank will deliver next week.

Inflation in Germany, as measured by the Consumer Price Index (CPI), declined to 7.2% on a yearly basis in April from 7.4 percent in March. The reading came in below market expectations for a figure of  7.3 percent. On a monthly basis, the CPI was up 0.4 percent, down from +0.8percent in March.

The annual Harmonised Index of Consumer Prices (HICP), the European Central Bank's (ECB) preferred gauge of inflation, fell to 7.6% from 7.8% in the same period, compared to analysts' estimate of 7.8%.

Speculation had been growing that the European Central bank would possibly raise interest rates by 50 basis points next month but the lower than expected figure has now brought this into doubt and has put the odds at a 50-50 chance for such a move.

From the US we just witnessed the release of the personal core consumption index which remained quiet steady Consumer spending was unchanged in March, while underlying inflation pressures remained strong, which could see the Federal Reserve raising interest rates again next month.

The unchanged reading in consumer spending last month, reported by the Commerce Department on Friday, followed a downwardly revised 0.1% gain in February. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have increased 0.2% in February. Economists polled by Reuters had forecast consumer spending dipping 0.1%.

The overall economy grew at a 1.1% pace as the acceleration in consumer spending was offset by businesses liquidating inventories in anticipation of weaker demand later this year. The economy expanded at a 2.6% rate in the fourth quarter.