Euro struggles as investors await US CPI data, Fed speakers
TLT•The euro dipped 0.05% to $1.1192 against the dollar and hit a 16-month low against sterling as investors awaited US inflation data and Federal Reserve comments. Economists expect September CPI to rise 0.6% month-on-month and 3.6% annually.
1. Markets await US inflation data
The euro struggled against the dollar on Wednesday, dipping 0.05% to $1.1192, while the dollar index rose 0.04% to 102.50. Investors were watching US CPI data due at 1230 GMT and comments from Federal Reserve policymakers for clues on interest rates.
2. Inflation and rate expectations
Economists polled by Reuters expect September CPI to rise 0.6% month-on-month, after a 0.4% increase in August, and annual inflation to accelerate to 3.6% from 3.4%. Traders see a 78% chance the Fed will leave rates unchanged at its October 27-28 meeting, up from 53% a month earlier. The Fed raised its policy rate by a quarter point last month to a range of 3.75%-4.00%.
3. Eurozone pressures
The euro also faced pressure from higher oil prices and concerns over France’s fiscal health. French bonds have been among the hardest hit in a recent global selloff, as investors worry that political tensions ahead of next year’s presidential election could hinder deficit-reduction efforts. The euro reached a 16-month low against sterling.
