Commerzbank’s Michael Pfister argues that Eurozone inflation data have limited surprise potential for the foreign exchange market because many national figures are released beforehand and recent outcomes have largely matched expectations. He notes that, compared with the 2022–2023 inflation shock, current surprise magnitudes are much smaller, so the impact on interest-rate expectations and EUR/USD should be modest, leaving negotiations over the Strait of Hormuz as the key driver.

Eurozone data surprises seen as contained

"On a day otherwise light on economic data, the focus in the foreign exchange market today is likely to be on the preliminary inflation figures for the euro area in May."

"The problem is that many national economies usually release their figures ahead of the eurozone, so we have generally maintained that there is little potential for surprises in the foreign exchange market."

"If we compare the surprises from that period with those from recent months, we can safely say that we are still far from those levels."

"However, this is likely due in equal part to the fact that, despite the energy price shock, inflation has recently delivered few major surprises and has generally been in line with expectations."

"As long as we do not see more pronounced surprises, the effect on interest rate expectations is likely to remain limited."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)