• Prior +2.1%
• Core CPI +2.4% vs +2.4% y/y prelim
• Prior +2.4%

The important point of the release is that core annual inflation is seen steady at 2.4%, unchanged from October. The main sticking point in terms of inflation pressures is still Germany and that represents a headache for the ECB, with it being the region’s largest economy. As such, they are forced to stay on the sidelines until pressures there moderate further.

At the same time, we did get the euro area wages and labour costs data for Q3. The former is seen at +3.0% year-on-year with the latter at +3.3% year-on-year. But as a reminder, negotiated wages in the euro area was seen at 1.87% in Q3 and that is down from 3.95% in Q2.

In any case, all of this just serves to reinforce the narrative that the ECB will remain on the sidelines for the time being. That at least until there is some meaningful change to the economic landscape, especially in Germany on inflation, as we look to next year.

EUR/USD continues to trade at 1.1717 in European morning trade, down 0.3% on the day. The pair continues to be boxed in by large option expiries at 1.1700 and 1.1750 with little conviction to go running before we get to US trading later.