European Stocks Surge on Positive Inflation Report, Bitcoin Stabilizes After ETF Boost

European stocks are ending the week on a high, buoyed by another encouraging inflation report that will soon support the end of the ECBs tightening cycle.

Not only did the headline HICP rate fall further than expected, but the slight rebound at the core level – driven largely by unfavourable base effects, largely attributed to German transport subsidies last year – was lower than expected.

ECB policymakers will not get complacent on the back of today’s data but with inflation expected to fall further in the months ahead, core included later in the third quarter, we could well see a pause in rate hikes before the fourth quarter. This may enable the soft landing policymakers have been hoping for, with very shallow recessions a small cost to pay for price stability.

The unemployment rate staying at 6.5% as the number of unemployed fell slightly will keep ECB hawks on edge for signs of labour market tightness driving sustained excessive wage growth, but those fears should also subside over the coming months.

A rate hike in July looks highly likely on the back of recent ECB comments, particularly those after the meeting this month, but beyond that investors aren’t convinced thinking another is more likely than not but by no means guaranteed.

Bitcoin steady after ETF surge

Bitcoin is back in the green today but remains in the $30,000-$31,000 range it’s traded largely within over the last week. The ETF filings have given it some very positive momentum even with SEC lawsuits hanging over the industry. A break above $31,000 could see it accelerate higher once more with $32,500 potentially offering the next test.

Ed Moya

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.