Euro Threatening to Start Its Own Rally if Inflation is Strong

Economy

31-08-2022, 21:44

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INA – SOURCES

A nascent rebound in the euro could get its own hawkish boost from Wednesday’s key inflation data and that could keep a lid on further gains in the dollar.

The strong determination to fight inflation from the Federal Reserve at Jackson Hole has has bolstered similar debate between European Central Bank members, while falling gas prices have helped reverse declines in the common currency. The euro has climbed over 1% from its Aug. 23 two-decade low.

With markets pricing in a 60% probability of a 75 basis point ECB rate hike next month, there is plenty of room for investors to get more hawkish if European CPI data comes in hot -- which would likely provide further support to the fledgling euro recovery. Inflation is predicted to rise to 9.0% for August.