Eurozone inflation uptick unlikely to 'derail' future ECB rate cuts

Matthew Ryan, CFA Ebury

Yesterday’s Euro Area inflation data has somewhat muddied the water for the European Central Bank. The headline HICP measure rose back up to 2.4% in December, the highest level since July, while the core number remained stuck at a still elevated 2.7% for the fourth straight month.

We don’t think that this will derail further cuts from the Governing Council in the coming months (rate setters appear more concerned with the growth slowdown than price pressures), but it may at least trigger an element of dissent among the more hawkish faction.

Mostly second tier economic news will be released during the remainder of the week - perhaps the most noteworthy data point will be Thursday’s retail sales print, although this is for November and runs on a bit of a lag.

EUR/USD will instead continue to be driven by tariff news and Friday’s US payrolls report.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

AUD/USD keeps the red near 0.6950 after weak Aussie jobs data

AUD/USD holds losses near 0.6950 on disappointing Australian jobs data, extending the previous day's retracement slide from the monthly high and hitting a fresh weekly low during Thursday’s Asian session. Meanwhile, declining US bond yields drag the US Dollar away from the April 2025 high, touched after Wednesday's hot US CPI, helping limit losses for the currency pair.

USD/JPY slides back below 158.00 as USD reverses post-CPI gains

USD/JPY extends the previous day's pullback from a three-week high, attracting follow-through selling and sliding below 158.00 during Thursday's Asian session. Traders remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. The US Dollar, meanwhile, reverses Wednesday's hot CPI-led gains to April 2025 highs as US bond yields retreat on China bond-buying talk, further pressuring the pair.

Gold: Upside remains capped by $4,200

Gold regains the smile and leaves behind three consecutive days of losses, advancing to the $4,170 region per troy ounce on Thursday. The precious metal’s recovery comes amid the fresh offered stance in the Greenback and declining US Treasury yields while investors remain cautious ahead of the Fed’s Warsh speech on Friday.

Ripple clings to $1.30 support as downside risks intensify

Ripple is stuck in a bearish trend, trading near $1.30 on Thursday. The remittance token’s bearish shift reflects the broader cryptocurrency market, which remains under heavy selling amid concerns about accelerating inflation in the US.

Budget preview: Is Healey impressing the bond market?

There is less than 2 weeks to go before the Chancellor delivers his first budget. Unusually for the UK, the economic and financial backdrop to this budget is upbeat. UK bonds have been rallying, the FTSE 100 is the top performing major stock index this week, and the Pound is also stabilising versus the Dollar.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.