Euro steadies as markets raise bets of ECB hike after inflation data
Spain and Germany inflation releases could give some indication on the bloc's wider numbers due on Thursday.
Inflation in Germany's most populous state, North Rhine-Westphalia (NRW), rose by 5.9 % year-on-year from 5.8% in July, supporting expectations that the European Central Bank's tightening cycle might not end soon.
In Spain, consumer prices rose 2.6% year-on-year in August from 2.3% in July, and in line with the 2.6% expected by analysts polled by Reuters.
Money markets raised their bets on a September rate hike from the ECB, pricing in a 60% chance of a 25 basis-point move.
«A September hike at this stage could be more of a coin toss, but more importantly, we sense that the hawks will see it as a last chance to hike one final time,» said Benjamin Schroeder, senior rates strategist at ING.
«One key input to arrive at a final assessment is the inflation data this week,» he added.
The euro edged 0.1% higher to $1.0887. The dollar index — which measures the currency against six major peers including the yen and euro — slipped 0.1% to 103.47.
On Tuesday, the dollar index slumped 0.39% for its worst day in a month-and-a-half, after a slide in JOLTS job openings to a 2-1/2-year low spurred traders to pare bets for further U.S.
rate hikes. But traders are now looking ahead to the monthly non-farm payrolls report due on Friday.
«Focus from here will turn to more key data due this week to shape the sentiment around whether the Fed has achieved the prefect landing or whether there are reasons to start getting concerned about the economy,» said Charu Chanana, market strategist at Saxo.
Money markets currently place 86.5% odds for the Fed to keep rates steady on Sept.
