Yesterday we could hear a rather hawkish Christine Lagarde hinting at the need for further tightening. It is worth noting that inflation in the Eurozone remains clearly above 10%, so if inflation does not quickly fall below this level, the hawkish tone in the Eurozone can be expected to continue, although a "light" pivot was tried for a moment.
However, today's inflation in Spain surprises negatively. A reading of 6.8% y/y on expectations of a rebound to 7.4% y/y with the previous level of 7.3% y/y. The underlying rose slightly to 6.3 y/y from 6.2% y/y, but these are no longer as big increases as in the first half of this year. In view of this, attention will focus on today's data from Germany at 1 PM GMT. But if the inflation downward trend is confirmed, however, we may see a softening tone from the ECB.
