Analysts from Morgan Stanley (MS) conveyed their hopes from the US inflation ahead of the key US Consumer Price Index (CPI) figures for July. It’s worth noting that the MS signalled the risk of the EUR/USD pair’s fall towards the 0.9700 mark the previous day.
Also read: EUR/USD risks falling towards 0.9700 – Morgan Stanley
Important findings
We think the market is underestimating the stickiness of US inflation, the Fed's resolve in tackling it, and the necessary tightening required to achieve lower inflation.
US CPI on August 10 may be a critical market catalyst for the next leg of the USD rally should it exceed market expectations.
It should be noted that the the headline US CPI is expected to ease to 8.7% YoY from 9.1% market forecasts whereas the CPI ex Food & Energy (Core CPI) is likely to rise from 5.9% to 6.1%.
