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By HaleStewart January 7, 2014 9:33 am
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Weak EU Inflation Reading Euro Negative

Today we learned that the EU is still in the middle of a potential deflation threat with the release of both CPI and PPI. 

From Eurostat:

Euro area annual inflation is expected to be 0.8% in December 2013, down from 0.9% in November, according to a flash estimate4 from Eurostat, the statistical office of the European Union.

Here's the accompanying chart from Tradingeconomics.com

Note the clear decline over the last 12-18 months.

This week, the ECB meets to discuss policy options.  They recently cut interest rates by 25 basis points, largely as a result result of potential deflationary pressure.  The latest report will add more fuel to the rate cutting fire.

All of this news is euro bearish.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

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