Euro unlikely to benefit as much from the same inflation surprise as the USD from PCE deflator – Commerzbank

Today, the French, German and Spanish figures, among others, a total of almost 65% of the HICP will be published. The new inflation figures for the Eurozone are due on Friday. This will give us an approximate indicator for Friday's figures. Michael Pfister, FX Analyst at Commerzbank, analyzes how inflation data could impact the Euro (EUR).

Euro could certainly benefit somewhat today if the national inflation figures surprise to the upside

The Euro could certainly benefit somewhat today if the national inflation figures surprise to the upside. That would be a clear sign that we will see higher numbers on Friday as well. But I want to make a quite different point. Namely, the Euro is unlikely to benefit as much from the same surprise as the USD from the PCE deflator.

Today's national inflation numbers will have to surprise much more to the upside than the PCE deflator for the market's interest rate expectations to move similarly sharply. As I said, the Euro should also benefit from higher numbers, but not quite as much as the Dollar in the event of similar surprises.