All eyes on German inflation

Market reports
Thanim Islam
  • Data dependent ECB will be watching German inflation
  • USD continues to decline following disappointing data


The USD lost ground in the afternoon after both the JOLTS job opening and consumer confidence numbers came in lower than expected. Money markets were quick to ease rate hike bets for 2023, and increased the prospect of a rate cut next year. Equity markets rallied on the back of the data, taking GBPUSD and EURUSDhigher on the day.


Market rates

* Daily move - against G10 rates at 7:30am, 30.08.23

** Indicative rates - interbank rates at 7:30am, 30.08.23

Data points


  • None today.

Our thoughts

US data is on tap all this week, with today's ADP payroll numbers, second estimates of GDP, and core PCE for Q2 next on the list. ADP payrolls have outperformed over the last two months, and markets are today expecting 195,000 jobs added in August. GDP estimates are expected to remain at a robust 2.4%, and core PCE expected to remain at 3.8%.

Today also sees the first round of inflation from the eurozone, with the release of August’s numbers from Germany and Spain. Higher than expected inflation numbers should shore up the prospect of a 0.25% hike by the ECB in September, given that the central bank is on data dependency mode. Spain's numbers have been released already showing that prices picked up to 2.4% from 2.1%. Could be another strong day for the EUR should the numbers support it.

Chart of the day

Data dependency is this name of the game from the ECB and today's numbers from Germany will give a good gauge of what the overall inflation print will likely be tomorrow. German 2-year yields continue to trade near multi-year highs, and whilst markets forecast a revision lower of inflation, an upside surprise will likely spur yields to climb higher as markets will likely raise the odds of an ECB hike in September, and add to gains on the EUR.

Source: Bloomberg Finance L.P.

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