The euro moved slightly higher against the dollar and pound yesterday following ‘hawkish’ comments from European Central Bank officials. Both Klaas Knot and Robert Holzmann suggested that stimulus measured should be tapered soon. These comments were also coupled with the flash reading of the Eurozone’s annual inflation rate.
The preliminary estimate showed that the Eurozone’s annual inflation rate is expected to accelerate to 3% in August, from 2.2% in the previous month and well above market expectations of 2.7 percent. This is also above the European Central Bank’s target of 2% and the highest since 2011.
This reading may prompt some discussions at the ECB’s policy meeting next week. The Bank have, so far, been reluctant to taper monetary policy and have viewed higher inflation as transitory.
Retail sales data for Germany came in lower than expected this morning, falling by 5.1% month-on-month in July, compared with market forecasts of a 0.9% decline.
