Euro: Modest rebound against US Dollar as yields rise – Danske Bank

On August 11, the Euro managed a modest rebound against the US Dollar, trading above 1.16, according to the Danske Bank Research Team. This upward movement came following a recent surge in Dollar strength, particularly after Federal Reserve Chair Kevin Warsh's Jackson Hole speech. Analysts noted a contained inflation environment across major Eurozone economies, with markets currently awaiting subsequent economic data releases.

Specifically, the flash inflation data for August was expected to be released, with France and Spain's national releases aligning with expectations, while Germany's report slightly fell short. German HICP inflation for August reached 2.9% year-over-year, a tad below forecasts, with energy and core goods inflation rising, whereas services and food inflation retreated, leaving core CPI stable at 2.4% year-over-year.

While energy prices spurred a noticeable increase in goods prices for the second straight month, services momentum remained stagnant at 0.15% month-over-month. Core inflation momentum, however, remained restrained at 2.5% three-month/3-month seasonally adjusted annualized rate, suggesting that energy price impacts on underlying inflation were still limited, similar to the situation observed in France and Spain last week.

The Euro's modest recovery was observed in tandem with a slight dip in USDJPY, which crossed below 160 following the strengthened Dollar post-Fed Chairman Warsh's speech at the Jackson Hole conference. The article also highlighted that the Eurozone was set to present its unemployment data, expected to remain at 6.3%, alongside the final manufacturing PMI for August, anticipated to validate the flash release of 52.8.