Last week’s ECB rate hike of 0.75% sent the euro on a strong upward trend but the Euro came crashing down as the US dollar has rebounded after the August inflation report was hotter than expected. Headline CPI dropped to 8.3% YoY, down from 8.5%, courtesy of lower gasoline prices. Inflation was still higher than the market expectation of 8.0%.
The latest inflation data have increased the odds of a 75 basis point hike at next week’s policy meeting. However, I believe that commodities disinflation should continue to drive declines in prices, particularly as they spill over to other categories such as goods and transportation services. Inflation should continue to cool and measures tied to the auto sector and travel/tourism will be weak in the coming months.
For now, to continue to short the Euro and buy it back after the next inflation data.
The latest inflation data have increased the odds of a 75 basis point hike at next week’s policy meeting. However, I believe that commodities disinflation should continue to drive declines in prices, particularly as they spill over to other categories such as goods and transportation services. Inflation should continue to cool and measures tied to the auto sector and travel/tourism will be weak in the coming months.
For now, to continue to short the Euro and buy it back after the next inflation data.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.