Inflation Has Started Low! These are some pointers that 'Traders' need to know

<p>&nbsp;European Union inflation has declined, and the report in November brought good news. Headline inflation fell to 2.4% year-on-year, down from 2.9% in October and below market expectations of 2.7%.</p><p><br /></p><p>A significant drop in energy prices was the main driver of the significant decline. Core inflation, which is higher than the headline figure, fell to 3.6%, down from 4.2% in October and below market expectations of 3.9%.</p><p><br /></p><p>The weak inflation report pushed EUR/USD up 0.74% on Thursday, but analysts believe ECB policymakers will be excited by the data. This is because it shows that aggressive tightening continues to control inflation.</p><p><br /></p><p>The headline CPI has fallen to its lowest level since July 2021 and is close to hitting the 2% inflation target. However, core CPI, which excludes food and energy and is a better indicator, will have to fall significantly before the ECB can say the fight against inflation is over.</p><p><br /></p><p><br /></p><p>The ECB has indicated that they do not plan to cut rates anytime soon. This has created a significant gap with financial markets, as market players believe that the ECB needs to respond to falling inflation and weak growth by cutting rates.</p><p><br /></p><p>The market has carried expectations of a rate cut into April due to weak inflation reports. As in the past month, the market has assessed a rate cut as early as July. Attention is focused on whether ECB President Lagarde will stick to high interest policy for longer or not?</p><p><br /></p><p>The US will this week with ISM Manufacturing PMI data. The manufacturing sector has been in a prolonged slump and the PMI has shown contraction for twelve consecutive months. The PMI is expected to increase to 47.6 in November, compared to 46.7 in October. A reading below 50 indicates contraction.</p><p><br /></p><p>Investors will be listening closely to Jerome Powell's speech at 12 o'clock, looking for clues on the upcoming rate decision.</p>