A key European macro reading of the day is the release of the flash German CPI report for September, scheduled for 1:00 pm BST. Market consensus points to an acceleration from 7.9% to 9.5% YoY. However, there is a big chance that the actual report will surprise to the upside given inflation data from German states released today:
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North Rhine Westphalia: 10.1% YoY vs 8.1% YoY in August
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Baden Wuerttemberg: 9.5% YoY vs 7.3% YoY in August
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Hesse: 9.4% YoY vs 8.0% YoY in August
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Bavaria: 10.8% YoY vs 8.4% YoY in August
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Brandenburg: 9.9% YoY vs 7.9% YoY in August
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Saxony: 9.2% YoY vs 7.3% YoY in August
As one can see, major acceleration was noted in almost all states with the majority of those printing readings of 9.5% or higher. EUR gained this morning but for different reasons. A number of ECB members that spoke today supported a 50 bp or 75 bp rate hike for the next meeting with Olli Rehn even saying that rates in EMU should get to neutral levels by Christmas.
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EURUSD started to recover on hawkish comments from ECB members. German inflation data at 1:00 pm BST may trigger a volatility jump on the EUR market. Source: xStation5
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