Eurozone inflation data – another argument for the EUR recovery? – Commerzbank

FXStreet Insights Team FXStreet

Today, Eurostat will release the eurozone inflation figures for October, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.

EUR can recover without high eurozone inflation

“After the German figures surprised on the upside yesterday (and were responsible for the euro being the strongest G10 currency yesterday), the market is likely to be waiting for a similar surprise for the currency area as a whole today. If that were to happen, the market's view of the ECB would be put to the test.”

“Whatever one may think of the ECB, if inflationary pressure remains high, it simply has no room to cut interest rates. Even most critics of the ECB would probably agree on that.”

“A high inflation figure today would complete the trend of the EUR recovery that we have been observing since the publication of the PMI indices. These had not even been surprisingly good. They just hadn't fallen any further. Should the market reaction today follow a similar pattern, it would not take a particularly high eurozone inflation rate for the euro to continue its recovery.”

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