Softer German CPI Inflation Data Causing Euro To Lose Against US Dollar and Pound Sterling (EUR/USD, EUR/GBP), SNB Interferes (EUR/CHF), USD/CAD

Softer German CPI Inflation Data Causing Euro To Lose Against US Dollar and Pound Sterling (EUR/USD, EUR/GBP), SNB Interferes (EUR/CHF), USD/CAD

Summary:

  • Early CPI data out of Germany indicated to the market that it may have passed its inflation peak.
  • SNB wishes to ensure Swiss exchange rates behave consistently with its monetary policy.
  • CAD is seemingly going to remain under pressure from the US Dollar.

ECB due to hike inflation rates in July

The market is reflecting bearish market sentiment for this pair. The Euro gained some favour early on in the Wednesday trading session in the wake of both industrial and economic data which exceeded estimates. The release of this data could reiterate the hawkish sentiment seen on Tuesday by various European Central Bank (ECB) officials, including ECB president Christine Lagarde. Early CPI data out of Germany indicated to the market that it may have passed its inflation peak, which resulted in falling Eurozone bond yields and Euro exchange rates. This data could perhaps indicate that the worst of the current inflation spike could be over.

Softer German CPI Inflation Data Causing Euro To Lose Against US Dollar and Pound Sterling (EUR/USD, EUR/GBP), SNB Interferes (EUR/CHF), USD/CAD - 1 EUR/USD Price Chart

Softer German CPI inflation data

The market is reflecting bullish signals for this currency pair. In the wake of German CPI inflation data beating expectations and showing signs of reaching a peak, the Euro managed to pound sterling. The European Central Bank is prepared to raise interest rates in July and again in September as it attempts to control surging inflation this has created a shift in policy which has boosted Eurozone bond yields and offered a floor under the Euro. However, lower inflation readings could turn the ECB to be more cautious and opt for a 25 basis point hike instead of a 50 basis point hike and could also suggest that there may not be as many interest rate hikes in the coming months as was anticipated.

Softer German CPI Inflation Data Causing Euro To Lose Against US Dollar and Pound Sterling (EUR/USD, EUR/GBP), SNB Interferes (EUR/CHF), USD/CAD - 2

EUR/GBP Price Chart

SNB interference offering the CHF support

The market is reflecting bearish signals for this currency pair. The Swiss Franc has remained one of the top performing major currencies thanks to the role the Swiss National Bank (SNB) has played in helping the Swiss Franc’s performance. The strong performance came in the wake of heavy intervention by the SNB during the Tuesday trading session who had recently said it would be prepared to sell reserves in order to ensure that the Swiss exchange rates behave in a manner that is consistent with its monetary policy.

Softer German CPI Inflation Data Causing Euro To Lose Against US Dollar and Pound Sterling (EUR/USD, EUR/GBP), SNB Interferes (EUR/CHF), USD/CAD - 3 EUR/CHF Price Chart

CAD proving it can keep up with the US Dollar

The market is reflecting bearish signals for this currency pair. The Canadian Dollar may continue to outperform the pound sterling and Euro, however, it is seemingly going to remain under pressure from the US Dollar. The Canadian Dollar has proved it is able to keep in touch with its southern neighbour better than its G10 counterparts.

Softer German CPI Inflation Data Causing Euro To Lose Against US Dollar and Pound Sterling (EUR/USD, EUR/GBP), SNB Interferes (EUR/CHF), USD/CAD - 4 USD/CAD Price Chart

Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Rebecca Duthie

Rebecca Duthie

Remote Editor and writer Intern
FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.