ECB Likely To Remain Hawkish (EUR/USD), U.K CPI Inflation Returns To Double Digits (EUR/GBP), BoJ Unbothered By Weak Yen (USD/JPY)

Summary:

• Eurozone CPI inflation missed double digits.
• UK inflation increased from 9.9% to 10.1%.
• USD/JPY has positive carry.

Eurozone inflation beat market expectations

The market is reflecting mixed signals for this currency pair. The data, which narrowly avoided the 10% inflation mark as compared to September of last year, would undoubtedly support the recent hawkish stance taken by senior ECB members. Centeno and Visco, two ECB members, will get the chance to comment on the most recent inflation data later today as ECB talk is expected to slow down before the required blackout period prior to Thursday's rate decision.

There is a new significant market driver in town as the US is currently in earnings season. This will highlight a variety of subjective factors because what US company executives say can start to shape expectations for future quarters' results. The key question at this time is how the sudden and sharp spike in rates has affected businesses.

✕ EUR/USD Price Chart

EUR/GBP limped temporarily

The market is reflecting bullish signals for this currency pair. After Office for National Statistics data indicated that inflation increased more than anticipated in September, the Pound Sterling temporarily limped against the Dollar and the Euro. However, this outcome does little to deter the Bank of England (BoE) from raising interest rates aggressively in November.

In September, UK inflation increased from 9.9% to 10.1%, defying the expectation of economists who had expected the annual rate of price growth to exceed 10% for the previous month.

✕ EUR/GBP Price Chart

USD/JPY remains positive

The market is reflecting mixed signals for this currency pair. The carry is still positive for the USD/JPY currency pair, and it will continue to be so as long as US interest rates are still rising and Japanese monetary policy is as it is. A weak Yen isn't all that awful for Japan, and it doesn't seem to be causing much concern at the central bank, according to BoJ Governor Kuroda. However, since the intervention was requested by the Ministry of Finance late last month, the same cannot be stated there.

There is a new significant market driver in town as the US is currently in earnings season. This will highlight a variety of subjective factors because what US company executives say can start to shape expectations for future quarters' results.

✕ USD/JPY Price Chart

Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com