EUR/USD Rises After US Inflation Data
- US headline inflation jumps to 2.1% from 1.7% as higher energy prices feed through.
- EURUSD pushes higher as US interest rate hikes seen later in the year.
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Headline inflation in the US picked in December to 2.1% from 1.7% last month, as higher energy costs fed through into prices. Energy prices rose by 1.5% in December, while food prices stagnant for the sixth month in a row.
According to analysts, inflation around the 2% level will likely stay the Federal Reserve’s hand and delay interest rate hikes until the middle of the year, when expected wage growth and US President–elect Donald Trump’s USD1 trillion fiscal stimulus is likely to push inflation towards 3%. Others however see the Fed acting before by mid-2017, when inflation is expected to hit 2.5%, and look for a rate hike as early as March.
The US Dollar fell back slightly after the data hit the wire, with EURUSD trading up at 1.06810 from a pre-release level of 1.06610.
Chart: EURUSD 1-Minute Timeframe (January17-18, 2017)
--- Written by Nick Cawley, Analyst
To contact Nick, email him at Nicholas.email@example.com
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