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EUR Shrugs Off Softer German Regional CPIs, Takes Lead From Yields

FOREX
  • Focus ahead turns to the national German CPI print after this morning's regional releases pointed toward an inline-with-expectations print. Consensus looks for 0.3% M/M and 4.6% Y/Y. Markets generally shrugged off the softer-than-previous North-Rhine Westphalia and Bavaria inflation data, with EUR instead watching the inexorable rise in 10y yields across Germany: the 10y Bund yield has risen to fresh cycle highs, touching the best level since 2011.
  • GBP/USD defying the bearish near-term outlook to rise to a session high of 1.2175 in recent trade, benefiting from the softer USD backdrop and allowing EUR/GBP to post a second session of losses after the cross rejected a test of the key 200-dma resistance at 0.8710.
  • Any further faltering of the USD rally should allow overbought technical conditions to subside: EUR/USD, GBP/USD (and to a lesser extent, USD/JPY) had posted their most oversold technical backdrop since April last year earlier this week - meaning markets are likely undergoing a corrective recovery, but the medium-term USD uptrend remains intact regardless.
  • The AUD is outperforming modestly, allowing AUD/USD to bounce off the cycle lows posted yesterday at 0.6331. Nonetheless, yesterday's highs remain intact for now at 0.6409.
  • Outside of Europe, weekly US jobless claims are on the docket as well as the tertiary read for Q2 GDP - expected to be notched slightly higher to 2.2% from 2.1% previously.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Energy BulletsCommodities
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Energy BulletsCommodities

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