Eurozone inflation data in focus in the session ahead

July 31, 2024 at 05:53AM
The Japanese yen and Australian dollar have been the main movers in Asia Pacific trading today. The former owes to the BOJ decision, with the central bank hiking rates to 0.25% as expected after yesterday’s leak. Meanwhile, the latter owes to a much softer inflation report earlier – which tempers with expectations for a rate hike next month.

BOJ raises policy rate to 0.25% in July monetary policy meeting

Australian Q2 core inflation +0.8% q/q (expected 1.0%)

Looking to European trading today, inflation data is in focus but it might not offer too much for the euro to work with. The disinflation process continues to face bumps in the road and July is likely just that. The German stats office yesterday noted that core annual inflation in July is expected to be at 2.9% – similar to June.

As for the Eurozone as a whole, core annual inflation was seen at 2.9% in June itself. It is estimated to fall to 2.8% in July based on the readings later. As the trend stays the course and the economy softens in Q3, it does incentivise the ECB to go with a rate cut after the summer.

However, they certainly would like more progress on the inflation front surely. That considering prices are still holding well above their 2% target for now.

In terms of market pricing, traders are still seeing a ~68% probability of a rate cut in September and that is unchanged from yesterday.

0600 GMT – Germany June import price index0645 GMT – France July preliminary CPI figures0755 GMT – Germany July unemployment change, rate0800 GMT – Switzerland July UBS investor sentiment0900 GMT – Eurozone July preliminary CPI figures0900 GMT – Italy July preliminary CPI figures1100 GMT – US MBA mortgage applications w.e. 26 July

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

This article was written by Justin Low at www.forexlive.com.