The most recent inflation data from the euro area has shown a sharper increase than expected with the Y/Y reading rising to 1.9% for the past month - its highest level since April 2017. The reading is now almost back at the 2.0% ECB mandate and should it sustain around these levels over the summer then it could well start to impact the bank’s policy and speed-up the process of monetary tightening.
EUR/USD bounces from 10-month low
The single currency has built on Wednesday’s gains this morning and moved back above the 1.17 handle against the US dollar. Wednesday’s session saw a possible reversal signal with a bullish outside day as buyers managed to step in and successfully defend the key longer term level around 1.15.
The market seems to have regained its composure somewhat after the big moves seen on Tuesday, with a slight alleviation of possible political risk regarding Italy no doubt aiding the cause for this pair. If this low around 1.15 can hold then the market could look to recover some of the losses seen over the past month, with the market in a near-constant state of decline from the 1.23 region.
Deadline looms for US steel tariffs
After gripping the markets just a couple of months back, trade tensions have taken a backseat to European politics in terms of key drivers, but with 25% steel tariffs from the US set to come into effect tomorrow morning this is something which could come racing back to the forefront of traders minds.
Gareth Stace, the head of the trade body UK Steel, has said that EU leaders have a “gun held to their head” over the threat of US tariffs with the bloc already stating it will respond by imposing tariffs on US products such as motorcycles and jeans. A temporary exemption from the tariffs had led many to hope that a new deal could be struck, but following reports that last-minute talks in Paris with Wilbur Ross, the US Commerce Secretary, have failed looks set to set these levies administered.