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Euro-Zone Inflation Rises 1.7 Percent In July

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fxheadlines08.16.10_body_fxheadlines.jpg, Euro-Zone Inflation Rises 1.7 Percent in July

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fxheadlines08.16.10_body_fxb.png, Euro-Zone Inflation Rises 1.7 Percent in July

Fundamental Headlines

• Euro, Dollar Fall Against Yen – Wall Street Journal

• Weak Japan GDP Hits Markets – Wall Street Journal

• Chinese Economy Eclipses Japan – Financial Times

• China Overtakes Japan as World’s Second-Biggest Economy After 30-Year Rise – Bloomberg

• Franc Resumes Advance on Swiss Recovery as Euro Region Faces Budget Gloom- Bloomberg

EUR/USD: Euro-zone annualized consumer prices for the month of July rose to 1.7 percent from 1.4 percent the previous month on the back of rising energy prices. Looking at the breakdown of the report, followed by energy prices, housing costs contributed to the upward pressure on inflation, climbing to 2.7 percent from 1.8 percent in June. Going forward, demand pull pressures will remain subdued as governments implement tough austerity measures to battle their ballooning budget deficits, which will in turn weigh on export demand. EUR traders will now shift their focus to the balance of payments report due out tomorrow.

In the currency markets, the EUR/USD has halted its 5 day decline and has slipped back above the 100-day. However, failure to close above this moving average may lead up to downside risks back towards 1.2650.

Written by Michael Wright, Currency Analyst

To Receive Future Articles by Email, please contact me at mwright@fxcm.com

Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast

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