EURUSD took a break. Overview for 03.02.2022

EURUSD stopped rising before the ECB meeting.

The major currency pair took a break from growing before the ECB meeting. the current quote for the instrument is 1.1300.

The CPI Flash Estimate in the Euro Area showed 5.1% y/y in January after being 5.0% y/y the month before; it’s a new high for the indicator. The Core CPI Flash Estimate was 2.3% y/y, less than in the previous month (2.6% y/y) but still more than expected (1.9% y/y). European inflation is very important for investors: the high CPI means that the ECB could start tightening its monetary policy earlier than expected.

The regulator is scheduled to have a session today, and, as a result, volatility in the major currency pair may drop before it.  

The US statistics published yesterday also sprang a surprise, and it wasn’t a pleasant one. 

The ADP Non-Farm Employment Change showed -301K in January after being 776K in December and against the expected reading of 207K. It’s the biggest drop since April 2020 and the first one since December 2020. The components of the report show that the biggest decline occurred in the services sector (-274K). 

There is no direct correlation between the ADP Non-Farm Employment Change and the NFP to be published on Friday but yesterday’s report always helps to obtain an overview.

It’s quite interesting that the uptrend in the labour market parameters usually signals growing inflation. Does it mean that the US CPI was slowing down in January? We’ll know the answer soon.