EUR/USD is flat in the Thursday session. Currently, the pair is trading at 1.1286, down 0.01% on the day. On the release front, German Final CPI came in at 0.2%, matching the forecast. Eurozone industrial production declined 0.5%, weaker than the estimate of -0.4%. In the U.S., unemployment claims is expected to dip to 215 thousand. On Friday, the U.S. releases retail sales reports and UoM consumer sentiment.
German and eurozone numbers disappointed on Thursday, but the euro shrugged off the weak numbers. German Final CPI came in at 0.2%, unrevised from the initial reading. Still, this gain was much smaller than the April gain of 1.0%. Eurozone industrial production continues to struggle, posting a third consecutive decline. The ongoing contraction reflects significant weakness in the manufacturing sector, which has been hit hard by global trade tensions, which have lessened demand for German and eurozone exports.
In the U.S., the focus was on consumer inflation indicators for May. CPI slowed to 0.1%, down from 0.3% in the previous release. This matched the estimate. The core reading posted a gain of 0.1% for a fourth straight month, shy of the forecast of 0.2%. With the May inflation numbers remaining low, there could be more pressure on the Fed to lower interest rates in order to boost economic activity and inflation. The likelihood of further rates this year is increasing – the CME Group has set the odds of a July cut at 66% and another cut in September at 50%. Lower interest rates makes the U.S. dollar less attractive to investors, so investors will be keeping an eye at alternative assets.
