The Euro-zone is experiencing no relief from rising prices, as the producer price index rocketed a record 8.0 percent in June from a year earlier.
This was due primarily to 21.4 percent annualized jump in energy prices, and will do little to calm ECB President Jean-Claude Trichet’s hawkish bias. Though the ECB is anticipated to leave rates at 4.25 percent on Thursday morning at 7:30 EDT, we often find that Mr. Trichet’s commentary at 8:30 EDT is far more market-moving for the euro. Nevertheless, looking at more timely releases, Euro-zone retail sales are forecasted to have slumped 0.6 percent in the month of July. However, there is a risk that this figure will be even worse than predictions given the sharp drop in German retail sales during the same period. My fundamental bias for the euro on Tuesday: bearish. It’s worth noting that this release may only have a short-lived impact on the currency, especially when it comes to EUR/USD due to the US event risk on hand.
Written by Terri Belkas, Currency Strategist for DailyFX.com
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