Single Currency Expects German CPI Data for Support
The euro is under pressure after it was reported that the Italian Coalition Government insists on increasing costs by 2.4% in 2019. The EUR/USD pair fell by 0.43% versus US dollar and traded below $1.17 level for the first time in five days. US dollar remains steady after Fed rate hike, with the dollar index trading 0.39% higher.
As expected the Fed raised its fed funds rate by 25 basis points, putting the upper bound at 2.25%, thus remaining on course to raise rates every quarter this year. There was no surprise in this decision, and there was nothing in the accompanying statement that suggested that any on the FOMC were resiling from the prospect of raising rates again in December.
Meanwhile, China's central bank left short-term rates unchanged, choosing not to follow a benchmark interest rate rise by the US Federal Reserve despite the risk that it could that it could put renewed pressure on the yuan.
Germany will release inflation data today. German CPI numbers for September are expected to show that inflationary pressures in the German economy have remained subdued at 1.9%, still comfortably below the ECB’s 2% target for price stability. Later today the final iteration of US Q2 GDP is expected to be confirmed at 4.2%, while durable goods for August are expected to show a rise of 1.9%, up from a 1.7% decline in July.