German CPI's Comes In Mixed

Published date: 28/06/2018
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EUR/USD has been slammed back towards the recent lows, where circa 1.1500 still represents a strong congestion zone.  So far this morning, we have seen the release of the German regional CPI figures, which are a bit of a mixed bag as Bavaria prints a 2.4% year on year reading compared to 1.8% in Hesse. All eyes will be on the EU wide number out tomorrow, which is expected to see the headline rate up to the target 2.0% level, however the ECB will factor in the key reasons, namely exchange rate losses and higher energy costs.  

Even so, the latest ECB economic bulletin reports that inflation is expected to pick up in H2, and with the EUR having lost ground considerably over recent months, we expect tailwinds to impact on growth and trade, though the latter is very much in the balance as the EU battle with the US administration on tariffs.  

Coming up this morning are the EU sentiment indices, though expectations will be low, so perhaps not too much focus on these surveys at the current time. 

For now, it is all about the USD and where this could force the EUR/USD rate - along with others. EUR/GBP is pushing higher into the band of offers seen in the 0.8820-40 area, although this is largely month-end flow which is also hurting Cable in the current climate.  EUR/USD support seen either side of 1.1500 in the meantime, and as we saw yesterday, NY had a strong appetite for buying USDs and we can expect a high probability of the same today.

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