Well, this will do nothing to douse those hawkish expectations around the next steps for the European Central Bank.
The euro is continuing to float above $1.14 against the dollar after the first of the day’s regional inflation readings from Germany pushed higher.
Prices rose by 1.7 per cent in Saxony on the year in June, up from a 1.6 per cent gain in May. On the month, prices rose by 0.2 per cent, from a 0.1 per cent decline in May. Other regions are due to report over the rest of the day.
German government bonds also fell – another sign that traders sense growing impetus for shift towards pulling back monetary stimulus in the euro area.
This has, of course, been a big issue this week, with ECB chief firing up expectations that a shift is at hand with his unusual focus on reflation, only for officials to try and backtrack slightly later.
German bank Commerzbank writes:
It is clear that the ECB’s communication tricks are not sufficient to close the floodgates that Draghi opened.