Talking Points:- Euro Unlikely to Find Follow-Through in German CPI, Unemployment Data
- US Dollar May Rise as Upbeat 2Q GDP Report Amplifies Fed Rate Hike Bets
The preliminary set of July’s German CPI figures headlines the economic calendar in European trading hours. The benchmark year-on-year inflation rate is expected print at 0.3 percent, unchanged from the prior month. German Unemployment figures are likewise on tap, with the ranks of the jobless expected to shrink by a further five thousand.
On balance, neither release is likely to inspire meaningful follow-through from the euro considering their limited implications for near-term ECB monetary policy. Indeed, the central bank appears effectively on auto-pilot as it continues to implement its €60 billion/month QE effort through September 2016.
Later in the day, the spotlight will shift to second-quarter US GDP report. An increase of 2.5 percent is expected, marking a swift rebound following the 0.2 percent contraction in the first three months of the year. US economic data has increasingly outperformed relative to consensus forecasts recently, opening the door for an upside surprise. Such a result stands to reinforce bets on an on-coming Fed interest rate hike following yesterday’s hawkish shift in FOMC rhetoric, boosting the US dollar.
