ECB's de Guindos: Factors behind recent surge in inflation are of transitory nature

Eren Sengezer FXStreet

European Central Bank (ECB) Vice President Luis de Guindos said on Friday that factors behind the recent surge in inflation, such as the disruption in supply chains, are of transitory nature, as reported by Reuters.

Additional takeaways

"Inflation in eurozone will decline next year, but maybe not as much as expected due to second-round effects."

"Any increase in wages have to take into account that inflation surge is transitory."

"Risks to financial stability have somewhat improved to better economic outlook."

"Recovery in the fourth quarter will not be as vigorous as expected."

Market reaction

These comments were largely ignored by market participants and the EUR/USD pair was last seen rising 0.06% on the day at 1.1560.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD remains on the back foot around 1.1700

EUR/USD is coming under heavy selling pressure, hovering around the 1.1700 region in the latter part of the NA session on Monday. The pair’s severe retracement comes as the US Dollar stages a marked bounce on the back of the prevailing flight to safety atmosphere, as investors react to the escalating conflict in the Middle East.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold eases some ground, approaches $5,300

Gold now surrenders part of the earlier advance, reshifting its attenton to the $5,300 zone per troy ounce at the beginning of the week. Indeed, the yellow metal’s firm performance appears propped up by incresing geopolitical jitters in the Middle East, which at the same time fuels the demand for the safe-haven space.