The US bond yield curve, which had been inverted for the past two years, had returned to normal. This meant that short-term bonds offered higher yields than long-term bonds, which was counterintuitive. Historically, an inversion of this curve has always presaged a recession within a few to several months. In the coming week, Thursday's ECB interest rate decision, preceded by inflation readings in Germany and the US, will be key for investors.
Table of contents:
- German consumer price index (CPI) annualised (August)
- US consumer price index (CPI) annualised (August)
- Eurozone interest rate decision
Tuesday, 10.09, 8:00 CET, German consumer price index (CPI) annualised (August)
According to preliminary estimates, Germany's annual inflation rate fell from 2.3 per cent in July to 1.9 per cent in August 2024, the lowest level since March 2021. Compared to the previous month, the CPI fell by 0.1 per cent Meanwhile, an increase of 0.1 per cent was expected.
Analysts' consensus is for CPI inflation to remain at 1.9 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the EUR, while a lower-than-expected reading could act bearishly on the EUR.
Impact: EUR/USD, EUR/PLN
Wednesday, 11.09, 14:30 CET, US consumer price index (CPI) annualised (August)
US annual inflation fell to 2.9 per cent in July 2024, the lowest level since March 2021, down from 3 per cent in June. Housing, transport and clothing costs declined, while food inflation stabilised at 2.2 per cent.
Analysts' consensus forecasts, a further decline in CPI inflation to 2.6 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the USD, while a lower-than-expected reading could act bearishly on the USD.
Impact: EUR/USD, USD/PLN
Thursday, 12.09, 14:15 CET, Eurozone interest rate decision
The ECB kept interest rates unchanged at its July meeting, in line with expectations. The main rate remains at 4.25 per cent. Despite high price pressures and inflation in the services sector, the ECB forecasts that inflation will remain above target until 2025. The Bank faces a difficult choice: to continue cutting rates, in line with market expectations and anticipated cuts in the US, or to maintain them at current levels.
Analysts' consensus is for a 25bp cut in interest rates, to 4.00 per cent.
Source: Tradingeconomics.com
A higher-than-expected interest rate could be bullish for the EUR, while a lower-than-expected interest rate could act bearishly on the EUR.
Impact: EUR/USD, EUR/PLN
Grzegorz Dróżdż, CIIA, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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