<ul><li>Prior was 10.9%</li><li>HICP m/m +1.1% vs +0.5% expected</li><li>Prelim CPI m/m +0.9% vs +0.6% expected</li><li>Prelim CPI y/y +10.4% vs +10.1% expected</li></ul><p>The regional numbers that have already been reported have been hot so this isn’t a huge surprise but it highlights the challgen the ECB face and that the 50 bps priced in for December 15 isn’t enough.</p>

This article was written by Adam Button at forexlive.com.

<ul><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/boj-governor-kuroda-20221028/“>BOJ Governor Kuroda says will not hesitate to ease further if needed</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-villeroy-says-no-obligation-to-raise-rates-by-75bps-at-the-december-meeting-20221028/“>ECB’s Villeroy says no obligation to raise rates by 75bps at the December meeting</a></li><li>France October CPI 7.1% y/y vs 6.4% expected</li><li>Spain October CPI 7.3% vs 8.1% expected</li><li>Italy October CPI 12.8% vs 9.9% expected</li><li>German Q3 flast GDP +0.3% vs -0.2% expected</li><li>Spain Q3 GDP +0.2% vs +0.3% expected</li><li>Eurozone economic sentiment 92.5 vs 92.5 expected</li><li>Swiss KOF October indicator 90.9 vs 93.2 expected</li></ul><p>Markets:</p><ul><li>Gold down $12 to $1651</li><li>Brent crude down 47 cents to $96.49</li><li>S&P 500 futures down 19 points to 3801</li><li>German 10-year yields up 13 bps to 2.11%</li><li>USD leads, JPY lags</li></ul><p>The euro has largely hung with the US dollar as we await German inflation data at the top of the hour. Returns so far in Europe have been hot and that will complicate the ECB’s job, though the market may be looking beyond October.</p><p>In Japan the yen is weak but did Kuroda open the door a crack to a hawkish shift when he said that that the underlying rise in inflation is likely to heighten medium and long-term inflation expectations and lead to a sustained rise in inflation accompanied by wage gains? I wonder if the market eventually circles back to that theme.</p><p>For now, bonds are in charge with rising yields rekindling the US dollar fire. Look for PCE to dictate the moves in US trading.</p>

This article was written by Adam Button at forexlive.com.

<p>WSJ Fedwatcher Nick TImiraos is tweeting about economic data at the moment and warning that PCE inflation „is expected to be on the high side“.</p><p>Given that he leaked a softening in the Fed stance on Friday, everything he writes gets extra scrutiny. That said, no one is leaking economic data to him. He’s refering to the consensus estimate on core at +0.5%, which he explicitly references.</p><p>Timiraos also highlights the employment cost index for Q3, which will be released at the same time as the PCE report. It’s lagged data but something the Fed has said it’s watching closely.</p><p>In any case, the market is smart enough to understand that Timiraos isn’t getting economic data ahead of time. The US dollar has been sliding in the past few minutes, which is the opposite of what you would get if today’s inflation data was hot.</p>

This article was written by Adam Button at forexlive.com.

<p>Today’s Eurozone inflation numbers highlight the tough task that ECB President Christine Lagarde faces in getting prices under control.</p><p>Yesterday’s 75 basis point hike was expect but the statement removed a reference to ’several‘ meetings of hikes and that sparked speculation that December could be close to the end of the cycle. The terminal rate is now priced close to 2.75%, which isn’t terribly restrictive.</p><p>Contrast that with today’s Italian CPI number at 4.0% m/m compared to 1.4% expected. That pushes the EU-harmonized y/y rate to 12.8% from 9.9% expected.</p><p>In Lagarde’s home country of France today, inflation rose 1.3% m/m compared to 0.6% expected with tye y/y number rising 6.2% and plenty more in the pipeline.</p><p>A lone bright spot so far is Spain where prices rose 7.3% y/y compared to 8.0% expected but we’re still waiting on Germany. So far the regional numbers have been hot and point to a national number around 0.7% compared to 0.5% expected. We’ll get the data at the top of the hour.</p>

This article was written by Adam Button at forexlive.com.

<p>The yen is struggling today after the Bank of Japan left rates unchanged and Governor Kuroda offered no hints of any change to yield curvey control. USD/JPY is up 144 pips to 147.72.</p><p>The bond market is also pressuring the pair higher with US 10-year yields up 8 bps to 4.02%, reversing most of yesterday’s move. </p><p>It’s been a volatile stretch for the yen after last week’s intervention. The decline below 145.50 was short-lived and the pair is now trying to reassert itself.</p><p>The next driver will be the US PCE report at 8: 30 am ET. Yesterday’s GDP data included lower than anticipated inflation numbers and that’s a hint that today’s PCE will be slower than anticipated, at least on the headline number.</p>

This article was written by Adam Button at forexlive.com.