Euro Gains as Inflation Data Strengthens Hawkish Case for ECB

Action Insight Mid-Day Report 10-31-24

Euro Gains as Inflation Data Strengthens Hawkish Case for ECB

Euro strengthened broadly after Eurozone's flash CPI revealed stronger-than-expected increase in headline inflation, while the decline in core inflation has come to a halt. This data, coupled with the better-than-anticipated GDP figures released yesterday, has provided substantial support to the hawks within ECB. There appears to be no immediate need for ECB to accelerate monetary easing efforts. A 25 basis point rate cut at the December meeting is being solidified as the baseline.

Yen is also displaying firmness following BoJ decision to maintain its current monetary policy earlier today. Additional support emerged from Governor Kazuo Ueda's remarks during the post-meeting press conference. Markets continue to anticipate the next rate hike to occur in the first quarter of next year. with some interpret Ueda's comments as leaving the possibility open for a December hike. However, two significant uncertainties remain: the formation of Japan's new government after the recent indecisive elections, and the outcome of the US presidential elections next week and their implications for Japan.

Conversely, Dollar is on the softer side stronger-than-expected core PCE inflation reading. For the greenback to regain the dominance observed in recent weeks, robust non-farm payroll data due tomorrow would be essential, especially ahead of next week's elections.....

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GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2919; (P) 1.2981; (R1) 1.3025; More...

Intraday bias in GBP/USD remains neutral as range trading continues above 1.2906 temporary low. Further decline is expected as long as 1.3070 minor resistance holds. Below 1.2906 will target 61.8% retracement of 1.2298 to 1.3433 at 1.2732. However, considering bearish divergence condition in 4H MACD, firm break 1.3070 resistance will indicate short term bottoming, and turn bias back to the upside for stronger rebound.

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EURUSD | USDJPY | GBPUSD | USDCHF | AUDUSD | USDCAD

EURJPY | EURGBP | EURCHF | EURAUD | GBPJPY

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Economic Calendar
GMT Ccy Events Actual Forecast Previous Revised
23:50 JPY Industrial Production M/M Sep P 1.40% 0.80% -3.30%
23:50 JPY Retail Trade Y/Y Sep 0.50% 2.30% 2.80% 3.10%
00:00 NZD ANZ Business Confidence Oct 65.7 60.9
00:30 AUD Retail Sales M/M Sep 0.10% 0.40% 0.70%
00:30 AUD Private Sector Credit M/M Sep 0.50% 0.50% 0.50%
00:30 AUD Import Price Index Q/Q Q3 -1.40% -0.20% 1.00%
00:30 AUD Building Permits M/M Sep 4.40% 2.20% -6.10%
01:30 CNY NBS Manufacturing PMI Oct 50.1 50.1 49.8
01:30 CNY NBS Non-Manufacturing PMI Oct 50.2 50.5 50
02:48 JPY BoJ Interest Rate Decision 0.25% 0.25% 0.25%
05:00 JPY Housing Starts Y/Y Sep -0.60% -4.10% -5.10%
07:00 EUR Germany Import Price Index M/M Sep -0.40% -0.40% -0.40%
07:00 EUR Germany Retail Sales M/M Sep 1.20% -0.50% 1.60%
09:00 EUR ECB Economic Bulletin
10:00 EUR Eurozone CPI Y/Y Oct P 2.00% 1.90% 1.70%
10:00 EUR Eurozone CPI Core Y/Y Oct P 2.70% 2.60% 2.70%
10:00 EUR Eurozone Unemployment Rate Sep 6.30% 6.40% 6.40%
11:30 USD Challenger Job Cuts Y/Y Oct 50.90% 53.40%
12:30 CAD GDP M/M Aug 0.00% 0.10% 0.20% 0.10%
12:30 USD Initial Jobless Claims (Oct 25) 216K 231K 227K 228K
12:30 USD Personal Income M/M Sep 0.30% 0.40% 0.20%
12:30 USD Personal Spending Sep 0.50% 0.40% 0.20%
12:30 USD PCE Price Index M/M Sep 0.20% 0.20% 0.10%
12:30 USD PCE Price Index Y/Y Sep 2.10% 2.10% 2.20%
12:30 USD Core PCE Price Index M/M Sep 0.30% 0.30% 0.10% 0.20%
12:30 USD Core PCE Price Index Y/Y Sep 2.70% 2.60% 2.70%
12:30 USD Employment Cost Index Q3 0.80% 0.90% 0.90%
13:45 USD Chicago PMI Oct 48.2 46.6
14:30 USD Natural Gas Storage 79B 80B