EUR/USD flows - National CPI figures coming in high; timing still a near-term focus
EZ national CPI prints coming in high; keeps mkt juggling odds, mindful of Lagarde's 'measured' guidance
Fed side of the equation also in balance after Williams less urgent - key data ahead
Eurozone national inflation figures still erring clear on the upside so far, following Spain and France. German state CPI prints largely come in with between 0.3pp and 0.5pp yr/yr accelerations. The consensus for the German figure later was for CPI to move to 3.1% from 2.9%, with HICP 3.2% from 2.9%.
Italy also follows the trend, coming in at 4.1% from 3.2% vs mkt 3.8%.
Lagarde’s early week comments (‘measured response’) had been offering a bit of a brake on any escalation of ECB pricing, though Oct odds are back to around 40%. The main balancing act on the relative central bank trajectories comes from the Fed side of the equation. William’s yesterday was a little bit less supportive of Oct vs Dec than some other recent hawkish Fed speakers (‘no urgency after Sep’, ‘more data will decide what next’). That data dependency makes upcoming payrolls, and especially PCE data and then CPI prints pretty key.
EUR/USD still attempting to slow on the test through and so far regain of the June lows.