Euro Slips Despite Hotter Inflation Across Europe

The Euro slipped as Europe's major economies reported hotter inflation in September, but this didn't boost bets on another European Central Bank (ECB) hike and the Euro. Germany, France, Italy, and Spain all saw their inflation above forecast, which should have lifted expectations of a higher ECB rate. However, the EUR/USD closed lower for the second straight day under 1.1350.

Energy prices tied to the US-Iran war are driving most of this inflation, and an energy shock raises prices while leaving households less to spend on other things. This is being seen as a tax rather than a reason to buy the Euro. ECB Executive Board member Schnabel said that the recent jump in global yields may dampen price pressures and let inflation return to target more gradually.

The flash Harmonised Index of Consumer Prices (HICP) for September is due Friday at 09:00 GMT, forecast at 3.6% YoY from 3.2%. A hot HICP reading could raise the October 29 odds, but EUR/USD also has the US jobs count to absorb on the same day.