Inflation the key this week

<p>The FX markets will be focusing on German CPI numbers tomorrow and overall EU inflation data on Friday, along with the US PCE equivalent. The […]</p>

The FX markets will be focusing on German CPI numbers tomorrow and overall EU inflation data on Friday, along with the US PCE equivalent. The European bond and equity markets have traded higher once again as EUR/USD tests 1.3150, driven by expectations that the ECB will announce full blown QE measures at their September meeting. This follows Mario Draghi’s comments at the Jackson Hole Symposium which clearly put the emphasis on inflation expectations, with another benign print all but pulling the trigger on QE in Europe. I’m sure this will not be welcomed by the Bundesbank. German Finance Minister Wolfgang Schauble is attempting to play down the Jackson Hole speech in a German newspaper article today as he suggests that the ECB President’s comments on growth versus austerity have been ‘over interpreted’ by the markets.

Commodities currencies enjoyed a better session despite weaker construction data from Australia as the catalyst for gains seem to be centred around Fonterra’s announcement that the milk pay-out forecast will remain at NZD6 per kilo despite the fall in demand. The NZ dairy producer also announced a joint venture with Chinese food manufacturer Beingmate.

Looking ahead today the data calendar remains bleak with only the weekly US MBA mortgage approvals being released.

 

EUR/USD

Supports 1.3150-1.3105-1.3000  | Resistance 1.3230-1.3280-1.3350

 

USD/JPY

Supports 103.50-102.95-102.50  | Resistance 104.30-104.85-105.05

 



GBP/USD

Supports 1.6530-1.6500-1.6420  | Resistance 1.6600-1.6640-1.6700

 

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