A look at the day ahead in European and global markets from Ankur Banerjee
After German inflation bucked the trend and rose more than expected in June, the spotlight will firmly be on euro zone and French inflation reports, with investors wondering if the German data was just a blip or something worse.
Economists polled by Reuters expect the euro zone inflation rate to fall to 5.6% in June from 6.1% in May.
While German consumer prices – harmonised to compare with other European Union countries – rose by a higher-than-anticipated 6.8% on the year in June, inflation slowed sharply in Spain and Italy.
ING economists said a bit of a divergence might be developing in terms of inflation in the region, leading to some disagreement on the best path forward for interest rates.
“Though one suspects that the response will be, if in doubt, hike,” they said.