Today we will be getting German Inflation data within the next 1h and 15m.
This German CPI will be in focus as Eurostat had problems in their systems the previous week and they gave an Estimation of Eurozone inflation along with estimating where possibly the German Inflation would land.
So at the back of this and while German's economy is 25% of EU's GDP , we are expecting some volatility to come in play , in case we get any big deviation in German Inflation data.
Now what the so wanted big deviation can be and what are we expecting at the back of this ?
German inflation printing higher than 9.5% and German Harmonised inflation printing higher than 10.3%
EURUSD - EURJPY 🔼
German inflation printing lower than 8.5% and German harmonised inflation printing lower than 9%
EURUSD - EURCAD 🔽
-Extra notes-
-Currently money markets are pricing in 41 bsp for the ECB meaning that we can go in any direction in case we get the deviation that we need and markets might price out 16 bsp (0.25% rate hike) or price in 9 bsp or more (0.50% rate hike).
-In case of higher inflation metrics possible targets can be EURUSD 1.0750 - 1.0775 - 1.0800 and EURJPY 141.50 - 141.80 - 142.20
-In case of lower inflation metrics possible targets can be EURUSD 1.0710 - 1.0690 - 1.0670 and EURCAD 1.4400 - 1.4380 - 1.4360
-Preferably we want to see MoM inflation metrics aligning to the one or to the other side and not get a mixed data out of it
-Higher conviction will come if headline inflation prints higher than 9.9% for the hawkish scenario or lower than 8% for the dovish scenario
EURUSD
This German CPI will be in focus as Eurostat had problems in their systems the previous week and they gave an Estimation of Eurozone inflation along with estimating where possibly the German Inflation would land.
So at the back of this and while German's economy is 25% of EU's GDP , we are expecting some volatility to come in play , in case we get any big deviation in German Inflation data.
Now what the so wanted big deviation can be and what are we expecting at the back of this ?
German inflation printing higher than 9.5% and German Harmonised inflation printing higher than 10.3%
EURUSD - EURJPY 🔼
German inflation printing lower than 8.5% and German harmonised inflation printing lower than 9%
EURUSD - EURCAD 🔽
-Extra notes-
-Currently money markets are pricing in 41 bsp for the ECB meaning that we can go in any direction in case we get the deviation that we need and markets might price out 16 bsp (0.25% rate hike) or price in 9 bsp or more (0.50% rate hike).
-In case of higher inflation metrics possible targets can be EURUSD 1.0750 - 1.0775 - 1.0800 and EURJPY 141.50 - 141.80 - 142.20
-In case of lower inflation metrics possible targets can be EURUSD 1.0710 - 1.0690 - 1.0670 and EURCAD 1.4400 - 1.4380 - 1.4360
-Preferably we want to see MoM inflation metrics aligning to the one or to the other side and not get a mixed data out of it
-Higher conviction will come if headline inflation prints higher than 9.9% for the hawkish scenario or lower than 8% for the dovish scenario
EURUSD
Steve G20