FXStreet (Guatemala) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman explained that on the inflation front, yesterday's news from Germany and Spain warned of downside risks to the reading for the region as a whole.
"Sure enough, the preliminary aggregate reading came in at 0.4, whereas the consensus had forecast an unchanged pace of 0.5%."
"The core rate was unchanged at 0.8%. This will be disappointing to the ECB where the staff had forecast a 0.7% rate for this year."
"Nevertheless, it most likely will not elicit a policy response at next week's meeting. The impact of the TLTROs, which will be launched in September, must be monitored first."
"In addition, the weakening of the euro is also helpful. It has declined 6 cents against the dollar since early May and is off about 3.2% on a trade weighted-basis since peaking in March."