The Euro is looking for a lifeline in Augusts’ inflation data amid churning stimulus expansion bets ahead of next week’s ECB monetary policy announcement.
Talking Points:
Euro Looking for a Lifeline in Eurozone CPI Report Ahead of ECB Meeting
Australian, NZ Dollars Move Lower as Risk Appetite Unravels in Asian Trade
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Augusts’ preliminary Eurozone CPI reading headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to edge lower to 0.3 percent, marking the lowest level since October 2009.
In overall terms, price-growth data from the single currency area has cautiously improved relative to consensus forecasts since the beginning of the year, opening the door for an upside surprise. A better-than-expected reading may chip away at speculation about an expansion of ECB stimulus measures at next week’s monetary policy meeting, sending the Euro higher.
Leading survey data disagrees however, pointing to the largest drop in output prices in there months in August. With that said, the extent of recent selling and seemingly stretched speculative net-short speculative positioning suggests the risk of outsized volatility may be asymmetrically greater on the upside than otherwise. For what it’s worth, technical positioning hints a EURUSD bounce may be ahead.
The Australian and New Zealand Dollars underperformed in overnight trade as risk appetite unraveled, weighing on the sentiment-linked high yielders. The MSCI Asia Pacific regional benchmark stock index fell 0.2 percent and is on pace to register its first monthly drop since April.
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