Don’t get too excited by weakening EZ inflation! | MarketTalk: What’s up today? | Swissquote

Show notes

The first set of inflation data from the Eurozone countries was mixed. Later this morning, we will find out the overall Eurozone inflation number for September. With a little bit of chance, the actual data will meet the soft market expectations, and strengthen the hand of the European Central Bank (ECB) doves. Yet this month’s figures should be taken with a pinch of salt.
The EURUSD tipped a toe below the 1.05 mark than rebounded on the back of a global retreat in the US dollar rally. The dollar retreated on the back of a soft set of economic data. Except from the light jobless claims report, the data showed that corporate profits didn’t improve as much as expected, real consumer spending slowed and the US GDP was revised marginally higher from 2% to 2.1%. The soft looking data led to some profit taking in the greenback. The dollar index retreated after a four-day rally that pushed it to the highest levels since November.
The US PCE, the Federal Reserve’s (Fed) favourite gauge of inflation is due before the week ends, and the US government shuts down. Core PCE may have slowed in August but the headline figure will likely reflect the rising gasoline prices, which could push the Fed doves out of the race.
On the US political scene, there was not much progress regarding the negotiations to avoid a government shutdown. The US government will more likely be shut from next week and strikes in Detroit will extend into another week,
In Japan, inflation came in slower than expected in September. If the US dollar rally wasn’t cooling, we would’ve seen the USDJPY go straight above the 150 level.
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