News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Japan's government pension investment fund (GPIF) will not include Chinese sovereign debt in portfolio Nikkei via BBG
  • The US Dollar continues to push higher against ASEAN currencies after the FOMC rate decision. This leaves the USD/SGD, USD/THB, USD/PHP and USD/IDR outlook mostly tilted higher.Find out from @ddubrovskyFX here:https://t.co/zn56iTFBxM https://t.co/bzCqq5pKdY
  • China's Evergrande Group reported to sell stake in its regional bank for near $1.5 billion - BBG
  • Update on #Cryptocurrencies #BITCOIN -1.84% #BITCOINCASH -2.03% #ETHEREUM -1.84% #RIPPLE -2.13% #LITECOIN -2.44%
  • Will be covering the Japanese #Yen to see how retail positioning could shape the outlook for $USDJPY, $AUDJPY and $EURJPY Starting in about 30 minutes! Signup for the session below: https://t.co/afqne77wU6
  • Join @ddubrovskyFX at 20:00 EST/00:00 GMT for a webinar on what other traders' buy/sell bets say about price trends. Register here: https://t.co/AzOQioRZER https://t.co/h2DAnqnY7J
  • #BlackRock: We are neutral U.S. equities. We see U.S. growth momentum peaking and expect other regions to be attractive ways to play the next leg of the restart as it broadens to other regions, notably Europe and Japan $SPX $NDX
  • #BlackRock: The new nominal theme leads to a steeper yield curve expectation than market pricing. We see yields rising gradually, keeping us broadly underweight government bonds, particularly for longer maturities #trading $TLT
  • BlackRock: We are overweight European equities, and neutral Japan #trading
  • Gold prices face off with rising Treasury yields as jobs data approaches. Meanwhile, iron ore prices caught a small bid on bullish port activity out of China. Get your market update from @FxWestwater here:https://t.co/A79cY6KvDI https://t.co/rJ0xqsUPu1
EURUSD Drops on Soft Inflation and Month-End

EURUSD Drops on Soft Inflation and Month-End

Justin McQueen, Strategist

Euro Analysis and Talking Points

  • “Vigorous” pickup in Core Inflation yet to be seen
  • ECB Set to End QE Purchases Despite Subdued Inflation
  • Euro Weakens on Month-End and Soft Inflation

For a more in-depth analysis on EUR, check out the Q4 Forecast for EUR

“Vigorous” pickup in Core Inflation yet to be seen

Given yesterday’s drop in German inflation, risks had been tilted to the downside for today’s Eurozone inflation figures, which confirmed as much. The headline figure fell 0.2ppts to 2%, while the core reading fell below expectations to 1.0%. Expectations of a “vigorous” pick up in core inflation voiced by ECB President Draghi back in September is still yet to be seen and given the sizeable drop in oil prices over the past 2-months, the inflation outlook has deteriorated. Elsewhere, the unemployment rate stood at 8.1%, expectations had been for a drop to 8%.

EURUSD Drops on Soft Inflation and Month-End

Source: Refinitiv.

ECB Set to End QE Purchases Despite Subdued Inflation

Despite core inflation remaining subdued, the ECB will be undeterred from bringing an end to its bond buying program at the end of the year. However, this will keep the ECB hawks quiet on the rate hike front. That said, money markets have priced out a 10bps rate hike next year with markets seeing a 60% chance that the ECB will lift off in December 2019.

Euro Weakens on Month-End and Soft Inflation

Month-end demand for Dollars has placed the Euro on the backfoot, coupled with the disappointing inflation readings. Alongside this, today marks another Federal Reserve balance sheet unwind, which typically provides support to the USD.

EURUSD PRICE CHART: 1-Minute Time Frame (Intraday)

EURUSD Drops on Soft Inflation and Month-End

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES