investingLive European FX news wrap: France and German inflation eases, USD recovers

• ASX 200 braces for impact with Australia’s CPI release: How is the market likely to react?
• AUDUSD Technical Analysis: Big day for Australia tomorrow with the inflation data release
• UK December final services PMI 51.4 vs 52.1 prelim
• German states see softer headline inflation readings in December
• Eurozone December final services PMI 52.4 vs 52.6 prelim
• Germany December final services PMI 52.7 vs 52.6 prelim
• France December final services PMI 50.1 vs 50.2 prelim
• Italy December services PMI 51.5 vs 54.0 expected
• USDJPY Technical Analysis: The focus turns to Japanese wage data, US NFP
• Spain December services PMI 57.1 vs 54.5 expected
• France December preliminary CPI +0.8% vs +0.9% y/y expected
• What are the main events for today?
• Japanese bonds selloff continues to run in the new year
• FX option expiries for 6 January 10am New York cut

The main highlights of the session were the French and German states CPI readings. The data missed across the board but didn’t really change anything for the ECB, which is widely expected to remain on hold for 2026. We had also the final PMI readings for the major Eurozone economies and the UK, and although the data was mixed, it leant on the slightly softer side.

The US dollar recovered some of the losses seen yesterday after the soft US ISM Manufacturing PMI. The general price action is still cautious as we await the US NFP report on Friday and then the US CPI next week. The market pricing for the major central banks hasn’t changed in the past couple of weeks as traders await the key data releases.

In the equities space, the mood remains positive with most major stock indices seeing gains on the day. Precious metals remain well supported with gold up 0.35% and silver more than 2%. The upward momentum is still intact amid the Fed’s dovish reaction function and the recent soft US data. US Treasuries, on the other hand, remain in the same old range since September with long-term rates seeing more upward pressure compared to short-term ones.

We don’t have much on the agenda in the American session, but from tomorrow we will start getting lots of important economic reports beginning with the Australian monthly CPI.

This article was written by Giuseppe Dellamotta at investinglive.com.