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- Euro area annual inflation is up to a record 9.1% according to the latest flash reading from Eurostat. This could now increase analyst calls for the 75 bps hike in the ECB's September meeting. The CPI reading which is a measure of the cost of goods indicated that energy costs contribute to the main bulk of the price rises.
The report noted, that the main component of euro area inflation, energy is expected to have the highest annual rate in August , followed by food, alcohol & tobacco , non-energy industrial goods and services . Economists and analysts are still expecting CPI to rise future in the future and predict it could hit double digits. The ECB increased interest rates by 50 bps in July and is expected to hike again in September. The debate at the moment is if it will be a 50 or 75 bps rise. The latest money market pricing is putting the odds between 50-60%.
Following the event, EUR/USD picked up off the lows of the day near 0.9973 to trade at 0.9986. The DAX index took a drop as all the talk of rate hikes hits risk sentiment adding to the recent Powell-induced fall following his Jackson Hole speech.