Inflation data is back on the menu in Europe today

The dollar is regaining some balance after facing a series of corrective selling yesterday as bonds rallied strongly in one of its best days in recent memory. Yields on 10-year Treasuries fell 22 basis points to 3.73% while yields on 10-year gilts fell 50 basis points to 4.00% after the BOE announced that it would conduct a QE-type intervention in an attempt to restore market order.

As we approach the end of the week, month-end and quarter-end trades will also be a factor and rebalancing flows could also play a role in the bond market, as seen yesterday. As for major currencies, Citi warns that its pattern points to buying USD and selling EUR, as shown here.

Even though the dollar sold off yesterday, it barely dented the momentum of the last few weeks. But at least the broader markets may be able to look for a break for now.

Going forward, German and Spanish inflation will continue to be monitored by the ECB, but all eyes will remain on the gilt market and bonds as to how the reaction to the BOE announcement will continue to show up before the weekend.

0700 GMT – Preliminary CPI figures for Spain in September
09:00 GMT – Final euro zone consumer confidence in September
09:00 GMT – Eurozone September Economic, industrial and services confidence
12:00 GMT – Germany – Preliminary CPI figures for September

That’s all for the upcoming session. I wish you all the best days ahead and good luck with your trading! Stay safe there.


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