Energy drives the headline rate and I suspect that the FX market will take its cue from the monthly Core figure: 0.3% (helped by lower rent inflation?) encourages talk of the Fed pausing tomorrow and feeds speculation that maybe we are at the peak after all. 0.5% increases fear of a hike tomorrow and barring that, at least one more hike thereafter. And at the margin, we’ll care about the decimal place, too.

EUR/USD will probably track any shift in Fed pricing. If we start to doubt the Fed will hike in July, EUR/USD can consolidate above 1.08 and start heading back towards 1.10, while the Dollar drifts lower across the board. Whereas a 0.5% monthly Ccore gain would do the opposite. 

From here, getting EUR/USD back to 1.15 in H2 probably requires the ECB to deliver at least 50 bps more hikes than the Fed, as per our economists’ forecasts.