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PIG TODAY-EUR/USD – Euro Trading at 1.10, Markets Eye US CPI Reports

EUR/USD is showing little movement on Tuesday, as the pair slightly above the 1.10 line. On the release front, there are no Eurozone releases on the schedule. Later in the day, the US releases key consumer inflation numbers. Both CPI and Core CPI are expected to show small gains in the September release. On Wednesday, there is one key release – Building Permits.

Weak Eurozone inflation levels have long been a major headache for policymakers, who have had to deal with fears of deflation for much of 2016. However, September brought better tidings on the inflation front. Final CPI improved to 0.4%, matching the forecast. This marked the highest monthly gain since October 2014. Still, this modest gain remains well below the ECB’s inflation target of just below 2.0%, so it’s doubtful that the ECB will make any significant moves at its policy meeting on Thursday.

Eurozone confidence indicators have been pointing upwards in October. This has been a surprising development, given that the Eurozone economy remains fragile, Brexit concerns are increasing and the banking sector appears in serious trouble. German ZEW Economic Confidence jumped to 6.2 points, while the Eurozone report climbed to 12.3 points. Both releases easily beat the estimates. Earlier in the week, Eurozone Sentix Investor Confidence report also improved, climbing to a 4-month high. Still, the sharp releases have failed to prop up the euro, which has declined 1.6 percent this week and dropped below the symbolic 1.10 level for the first time since late July.

EUR/USD closed last week below the 1.10 level, the first time that has has happened since late July. The dollar received a boost from strong US, retail sales data in September. Retail sales gained 0.5%, while core retail sales jumped 0.6%, as both key indicators rebounded from declines in August. PPI was steady at 0.3%, but the UoM Consumer Sentiment Index disappointed, dropping to 87.9 points and missing expectations. This marked the weakest reading since September 2015. The markets are keeping a close eye on Tuesday’s CPI and Core CPI releases – unexpectedly strong readings could propel the dollar to higher levels.

 

EUR/USD Fundamentals

Tuesday (October 18)

  • 12:30 US CPI. Estimate 0.3%
  • 12:30 US Core CPI. Estimate 0.2%
  • 14:00 US NAHB Housing Market Index. Estimate 64 points
  • 20:00 US TIC Long-Term Purchases

Wednesday (October 19)

  • 12:30 US Building Permits. Estimate 1.17M

*All release times are EDTSource: marketpulse.com

EUR/USD is showing little movement on Tuesday, as the pair slightly above the 1.10 line. On the release front, there are no Eurozone releases on the schedule. Later in the day, the US releases key consumer inflation numbers. Both CPI and Core CPI are expected to show small gains in the September release. On Wednesday, there is one key release – Building Permits.

Weak Eurozone inflation levels have long been a major headache for policymakers, who have had to deal with fears of deflation for much of 2016. However, September brought better tidings on the inflation front. Final CPI improved to 0.4%, matching the forecast. This marked the highest monthly gain since October 2014. Still, this modest gain remains well below the ECB’s inflation target of just below 2.0%, so it’s doubtful that the ECB will make any significant moves at its policy meeting on Thursday.

Eurozone confidence indicators have been pointing upwards in October. This has been a surprising development, given that the Eurozone economy remains fragile, Brexit concerns are increasing and the banking sector appears in serious trouble. German ZEW Economic Confidence jumped to 6.2 points, while the Eurozone report climbed to 12.3 points. Both releases easily beat the estimates. Earlier in the week, Eurozone Sentix Investor Confidence report also improved, climbing to a 4-month high. Still, the sharp releases have failed to prop up the euro, which has declined 1.6 percent this week and dropped below the symbolic 1.10 level for the first time since late July.

EUR/USD closed last week below the 1.10 level, the first time that has has happened since late July. The dollar received a boost from strong US, retail sales data in September. Retail sales gained 0.5%, while core retail sales jumped 0.6%, as both key indicators rebounded from declines in August. PPI was steady at 0.3%, but the UoM Consumer Sentiment Index disappointed, dropping to 87.9 points and missing expectations. This marked the weakest reading since September 2015. The markets are keeping a close eye on Tuesday’s CPI and Core CPI releases – unexpectedly strong readings could propel the dollar to higher levels.

 

EUR/USD Fundamentals

Tuesday (October 18)

  • 12:30 US CPI. Estimate 0.3%
  • 12:30 US Core CPI. Estimate 0.2%
  • 14:00 US NAHB Housing Market Index. Estimate 64 points
  • 20:00 US TIC Long-Term Purchases

Wednesday (October 19)

  • 12:30 US Building Permits. Estimate 1.17M

*All release times are EDTSource: marketpulse.com

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