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1 July 2024 | FXGT.com

French Election Boosts Euro: Eurozone CPI Estimates and Powell’s ECB Forum Speech in Focus

  • French Elections: The euro experienced an increase on Monday morning following the initial round of France’s election, which resulted in the far-right party taking the lead, albeit by a smaller margin than anticipated. Marine Le Pen’s far-right National Rally emerged as the winner in the initial round of France’s parliamentary elections on Sunday.
  • US Economic Data: Final GDP figures for the first quarter revealed a 1.4% annual growth rate, the slowest since spring 2022. Jobless claims reached a more than two-year high, indicating a weakening labour market.
  • US Inflation Data: In May, the PCE Index fell to 2.6%, the lowest annual inflation rate in over three years, though it remains above the Fed’s 2% target. This prompted traders to increase their expectations for a 25-basis point rate cut at the Fed’s September meeting, with market odds rising above 60%.
  • German CPI Drives ECB Speculation: A cooler-than-expected CPI report in Germany drove speculation of further ECB rate cuts this year. Germany’s CPI inflation rate decreased to 2.2% in June, with the EU figure also dropping to 2.5%, lower than expected.
  • Upcoming Events for the Euro: The main event on the eurozone calendar this week is the release of June’s flash CPI estimates, scheduled for tomorrow. The ECB’s forum in Sintra, taking place from today through Wednesday, will include crucial discussions on policy and inflation, with notable speakers such as ECB President Christine Lagarde and Fed Chair Jerome Powell. Additionally, the ECB minutes for June are set to be published on Thursday.
  • Upcoming Events for the US Dollar: US traders have a busy week ahead with several important data releases, including the JOLTs and ADP reports, as well as the ISM Manufacturing and Services PMIs. The FOMC will release the Minutes of its June meeting, and the week will conclude with the highly anticipated June Nonfarm Payrolls report.
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