Eurozone inflation accelerates to 3.3% in August

On Tuesday, September 1, financial markets exhibited relative calm as investors focused on Eurozone inflation figures and U.S. mid-tier economic data releases. The US Dollar (USD) emerged as the strongest against major currencies, including the New Zealand Dollar. Throughout the day, the US Dollar Index closed in the negative zone, erasing a small portion of the gains from the previous week.

US Treasury Secretary Scott Bessent stated that core inflation remains restrained and opposed the idea of raising interest rates in response to a supply shock. However, he refrained from predicting the Federal Reserve's (Fed) next policy move. Meanwhile, U.S. President Donald Trump expressed dissatisfaction with the Fed's interest rate stance and expressed confidence in Fed Chair Kevin Warsh.

Following a drop of around 0.3% on Monday, the USD Index maintained marginal gains at approximately 99.50 in the European morning. Later in the American session, JOLTS Job Openings data for July and the ISM Manufacturing Purchasing Managers Index (PMI) report for August would be highlighted in the U.S. economic calendar. According to BNP Paribas analysts, political pressure on the Fed has increased, with President Trump relentlessly criticizing the Federal Reserve and its leadership due to their failure to cut interest rates more.

BNP Paribas cautioned that once lost, central bank credibility requires both time and decisive action to restore, which could impose a higher economic cost to achieve price stability.