Welcome to our weekly overview of the most important key figure releases and how to trade them. We generally see a week of bad inflation news ahead of us and it will likely continue to emphasize recent trends in EUR (and GBP rates), also relative to USD rates. EUR/USD (and GBP/USD) could continue to see support from relative rates as a consequence. 

Wednesday, Thursday & Friday: European HICP to surprise hawkishly? 

This Wednesday, Thursday and Friday we’ll receive inflation data from the major countries in the Euro area. With inflation hovering around 2.4% for the Eurozone as a whole, the ECB is seeking confirmation for their anticipated first cut of 25 basis points in June.

May data is volatile and the risk of surprises is relatively high given some interesting “break-downs” of typical patterns through May in for example Spanish inflation data in 2022/2023.

We believe the ECB needs to implement this cut now, as inflation is likely to reaccelerate over the summer and into the fall due to current supply chain disruptions, which could spill over into both energy and goods categories. The question is whether they can deliver more than 2 cuts this year given the signs of re-acceleration?