Euro to Look Past CPI Data, May Fall on Italian Budget Woes

TALKING POINTS – EURO, CPI, ITALY, BUDGET, US DOLLAR, PCE, FED

  • Euro to look past CPI data, may fall on Italian budget woes
  • US Dollar might continue recovery on PCE inflation figures
  • Kiwi Dollar unable to capitalize in risk-on trade, Yen down

Eurozone CPI data headlines the economic calendar in European trading hours. The headline on-year inflation rate is expected to tick higher to 2.1 percent in September, revisiting the five-year high set in July. The outcome seems unlikely to offer a meaningful lift to the Euro however considering its limited implications for ECB monetary policy, which seems to be essentially on autopilot at least through year-end.

Finances in Italy may be in focus instead. The coalition government of populist Five Star Movement (M5S) and nationalist League unveiled a budget that set the deficit target at 2.4 percent, topping consensus forecasts. This may continue to widen the yield between Italian and bellwether German bond yields, speaking to rising credit risk in the Eurozone’s number-three economy and hurting the single currency.

US DOLLAR MAY EXTEND GAINS ON PCE DATA

Later in the day, the Fed’s favored PCE price

Article source: https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2018/09/28/Euro-to-Look-Past-CPI-Data-May-Fall-on-Italian-Budget-Woes.html