USD/JPY, EUR/USD flows: Waiting for Warsh; French, Spanish HICP bounce
Still sidelined ahead of Warsh
Early HICP print bounces keep mkt looking for Sep hike
Pause ahead of Warsh speech continues with EUR/USD still holding around the 1.1650-40 area. Whether this will live up to the billing, or prove to be high on rhetoric and low on substance is yet to be seen. The market assumption is that Warsh has incentives, given the recent backdrop, to sound superficially hawkish in commitments to inflation without necessarily saying anything substantive, given the limited appetite shown on lifting the hood on anything to do with the reaction function let alone guidance.
JPY also little moved after firm CPI data. The market has a 2/3 chance of a Sep hike in the price. Elsewhere oil remains within its recent range waiting to see how regional focused talks around the Strait continue and play out. All very treading water.
French flash CPI rises back to 2.7% from 2.4%, rebounding on energy prices. Spanish HICP up to 4.5% from 3.9% if short of mkt at 4.6%. Bounce back in inflation will keep the market priced for a Sep hike.