This morning, market focus will be on the Euro and inflation data for November. What might be the FX market’s take on the data? Downside surprise could drag EUR/USD down to 1.03, economists at Commerzbank report.
Prices are decisive
“If the data were to surprise to the downside the rate hike expectations for December might ease, which would provide a dampener for the Euro. A slide towards 1.03 would be possible.”
“If the data comes in above market expectations this is likely to support the hawks on the ECB board who have already been quite vociferous over the past few days and have caused the market to trend more towards a 75bp step again, which would support the Euro.”
“Surprisingly high inflation data from the eurozone combined with a US labour market report (ADP index published today, labour market report on Friday) that might show first signs of a slowing might catapult EUR/USD significantly above 1.04 again.”