The Euro edged lower to below $1.1 after the latest inflation data for the US raised bets the Fed will need to keep interest rates higher for longer. Producer prices came above market forecasts due to a rebound in services cost while headline and core consumer inflation slowed more than expected, but remained well above the Fed’s target. The odds for a 25bps rate hike in November by the Fed currently stand at about 32%. In Europe meanwhile, investors are divided on whether the ECB will deliver another interest rate increase. Data showed that core inflation in the Euro Area did not slow down in July as anticipated while economic data specially for Germany have been pointing to a weak outlook. At the same time, in tis July meeting, the ECB dropped guidance that borrowing costs would keep rising, with President Lagarde saying the September outcome will be either a pause or a hike.
