An inflation focussed week
The name of the game in markets currently still revolves around deciding how the respective paths of monetary policy easing will look across the globe. The hot forecast is therefore how inflation should be expected to be recorded amongst nations and currency areas. Given the importance of inflation statistics in deciding how central banks will adjust policy, this week will provide markets with plenty of data to examine and therefore create the potential for volatility. Despite FX volatility falling once again, position adjustment in the face of such data could be prompted.
Within the Eurozone we have already seen this morning the final April inflation rate published in Germany. France and Italy will also see April inflation figures finalised in publications in the coming days ahead of the Euro area as a whole which will be published on Friday. Whilst markets have already seen preliminary estimates of this data, any adjustments remain possible and could shape the inflation outlook for Europe. Later on today, April’s producer price index data will be observed in the US. Typically PPI has a greater influence in the US versus the rest of the world based upon its more significant correlation with the Fed’s preferred measure of inflation, the PCE deflator.
Should PPI data being observed today not be enough, for good measure we will see consumer price index inflation published tomorrow. Amidst a slew of Fed speak and other central bank figures this week, there is at least significant opportunity for FX movement. Particularly within the US, a dovish Federal Reserve appears eager to start the easing cycle discussion but so far lacks the data to do so. Any weakness amidst its data publications today or tomorrow would likely produce further selling pressure towards a higher fair value in EURUSD.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – British pound
Humphrey Percy
Fri 13 Jun 2025
British pound Sterling finds itself in the limelight and trading at its recent highs as somewhat improbably a couple of bolder market commentators have suggested the UK will benefit as a result of the disaffection with the USA and the USD at present. Those commentators have obviously not been following the commentary about UK Chancellor […]
Daily Brief – EU Inflation
Humphrey Percy
Wed 4 Jun 2025
EU Inflation Paving the way for a 25bp rate cut tomorrow, EU inflation came in at 1.9% on the back of uncertainty, lack of consumer confidence and people sitting on their cash. So overall good on inflation but a sign of less good things in the EU. As ever, the overall inflation figure had some […]
Daily Brief – UK Employment
Humphrey Percy
Wed 11 Jun 2025
UK Employment Real life consequences of policies that fulfil Chancellor Reeves’ agenda: this time we will not dwell on the plainly evident politics of envy stuff about targeting the higher earners, stuffing the non-doms, and even deciding to double tax those wishing to pay for private education or invest in property through second homes. This […]
