Markets Steady As Investors Await ECB Decision, U.S. August CPI Figures, and Fallout from Shooting of Charlie Kirk – Currency Thoughts
Markets Steady As Investors Await ECB Decision, U.S. August CPI Figures, and Fallout from Shooting of Charlie Kirk
September 11, 2025
Two and a half hours prior to U.S. released consumer price data, the weighted DXY dollar index was marginally above Wednesday closing levels. Gains ranged from 0.1% against the euro and Swiss franc to 0.3% relative to the yen and Canadian, New Zealand and Australian currencies. Ten-year sovereign debt yields had risen a basis point in the U.S., Germany and Japan. Prices for WTI oil and gold were down by 0.4% and 0.7%, while steady crypto marked time. The Japanese, Chinese and South Korean stock markets had risen 1.2%, 1.7% and 0.9%, while equities dropped 0.3-0.4% in Hong Kong, Australia and New Zealand. The quick appointment of a new French prime minister helped the Paris CAC begin to trim the losses that followed Monday’s vote of no confidence.
Yesterday’s killing of one of President Trump’s most trusted advisers at a Utah university campus remains unsolved. The unidentified assailant remains unidentified and on the loose. The shot was apparently fired from a distance away of almost a football field and a half. Markets are bracing for politicized divisions in America to escalate even further.
Analysts expect U.S. consumer price inflation to have gone higher too in August, with forecasts centered on a 0.2 percentage point acceleration of the overall on-year pace to 2.9% and for core inflation to be somewhat above 3.0%. Several recent voter opinion polls attest to mounting angst over the failure of price pressure to recede more extensive and indicate a reaction of disbelieve when President Trump and top economic advisors in the administration characterize inflation as a problem of the past that has now been fixed sufficiently. The ultimate effect of tariffs continues to be a big unknown and a force that has expected inflation elevated.
Today’s other big event involves the conclusion of this month’s review of Euroland monetary policy. The decision, which is expected to leave interest rates paused for a second straight time, will be announced at 12:15 GMT. Fresh staffing forecasts and ECB President Lagarde’s press conference will ensue. The ECB Governing Council began easing its restrictive stance in June 2024 and had lopped two percentage points from the peak within the following year. The ECB is but one of several central banks scheduled to make interest rate decisions known, including those in Uzbekistan, Turkey, Serbia, Ukraine, and Peru.
Japanese domestic producer prices of goods fell 0.2% on month but accelerated to a 2-month year-on-year high of 2.7%. Import prices rose 0.5% on month and posted a considerably smaller year-on-year decline of 3.9% in August following July’s 10.3% plunge.
Swedish consumer price inflation in August was confirmed unrevised from the preliminary estimate of 1.1%, which represents a 6-month high. The CPIF core measure of Swedish inflation that serves as the Riksbank’s target variable rose to a 19-month high of 3.2%.
Romania’s consumer price inflation pace more than doubled from 4.6% last September to 9.9% in August 2022.
Consumer confidence in Thailand weakened for a seventh straight month to a 32-month low in August.
Turkey experienced double-digit growth in retail sales in each of the past reported months, but the 13.0% reading in July was smaller than the gains in May and June.
The Central Bank of Uzbekistan’s policy interest rate was left unchanged at 14.0% at this month’s policy review. That’s well above CPI inflation of 8.8% currently. Expected inflation is even higher, and upside price risks from energy and tariff threats are further concerns. The most recent change in the interest rate was a hike of 50 basis points in March that reversed a cut made eight months earlier.
The National Bank of Serbia’s policy interest rate was likewise kept unchanged at 5.75%, which has been the level since a trio of 25-basis point cuts in June, July and September of 2024. Consumer price inflation ticked up to a 15-month high of 4.9% in July but is projected to drift back into its 1-5-4.5% target band soon. According to a released statement, ” Though less intense than a few months ago, uncertainty in the international environment remains pronounced, primarily due to the still uncertain future trade policies of leading world economies and geopolitical tensions. With regard to monetary policy decisions of leading central banks, market participants assess that the ECB’s monetary policy easing is nearing its end, while the Fed is expected to resume its rate-cutting after a longer pause.”
A reduction of the Central Bank of Turkey‘s one-week repo auction rate to 40.5% from 43.0% exceeded analyst expectations and the sixth policy rate change amounting to 250 basis points or more since December. Not all of those moves were reductions, however. Three consecutive 250-bp cuts last December, January and March were followed by a 350-basis point hike in April before cutting resumed with a 300-bp cut in July. That chaotic pattern, admittedly in the extreme, is all one needs to know about the imprudence of compromising on having a firewall between politicians and the deciders of monetary policy. The roller-coaster ride of central bank policy interest rates merely mimics an even more extreme trend in inflation and wild swings in the Turkish lira, too. From 85.5% in October 2022, Turkish consumer price inflation subsided to 38.2% in mid-2023, only to spike to 75.45% in May 2024, and now it’s back down to 32.95%, which is still far above the ultimate goal of 5%. According to a statement, “Recent data indicate that demand conditions are at disinflationary levels. Food prices and service items with high inertia are exerting upward pressure on inflation. Inflation expectations, pricing behavior, and global developments continue to pose risks to the disinflation process.”
As in Uzbekistan and Turkey, Ukraine has a double-digit central bank interest rate, which after today’s scheduled review has been retained at 15.5%, its level since three hikes totaling 250 basis points from December 2024 to March 2023. War is hell on inflation, and Russia’s invasion of Ukraine came on the heel of the pandemic years that drove inflation upward everywhere in in Ukraine to 10.0% by January 2022 just before the war started. By raising the National Bank of Ukraine‘s interest rate from 10% to 25%, monetary officials managed to squeeze CPI inflation down to 3.2% by April 2024, but the war’s persistence was a significant force that lifted inflation to a 23-month high of 15.9% by May of this year. That’s far above the 5% target, so even though inflation subsequently ebbed to 13.5%, officials have kept their interest rate at 15.5%, matching its highest level since December 2023. A released statement today opines that “the course of the full-scale war continues to be the key risk to inflation dynamics and economic development” but goes on to identifies additional causes” and concludes that keeping a 15.5% interest rate is appropriate to control inflation expectations and eventually regain the 5% inflation target.
The European Central Bank‘s deposit rate was kept at 2.0% today as widely anticipated. This was the second review without a cut following eight straight cuts totaling 200 basis points from June 2024 and June 2025. Today’s statement says that “Inflation is currently at around the 2% medium-term target and the Governing Council’s assessment of the inflation outlook is broadly unchanged.” Total inflation over that last seven reported months through August have ranged from 1.9% to 2.3%, including 2.1% in August. Updated forecasts, which the ECB does on a quarterly basis, project CPI inflation of 1.7% next year and 1.9% in 2027. Projected core inflation also stays under 2.0% in each of those years. The statement, like others, repeats that future policy is decided meeting to meeting and not on a pre-determined schedule.
In his offensive against the Fed’s policy pause so far this year, President Trump want Americans to believe that import tariffs are born by foreigners and not American consumers and claims that mission to reestablish price stability has been accomplished. He caught a break from yesterday’s tepid producer price data but not so today from the consumer price release for August. A monthly overall jump of 0.4% exceeded expectations and was the biggest rise since January. On-year CPI inflation of 2.9% was 0.2 percentage points higher than the 2.7% readings in June and July and 0.6 percentage points greater than in April when the scope of tariff hikes was first unveiled. In contrast to 2.8% core CPI readings in March, April and May, such has been 3.1% the last two months. Service sector price inflation, which is less influenced by the tariffs than the cost of goods, has printed at 3.8% for three straight times, indicating that inflation is being affected by more than the direct pass-through of higher tariff costs.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Turkey, Central Bank of Uzbekistan, European Central Bank, Japanese PPI, National Bank of Serbia, National Bank of Ukraine, U.S. CPI
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