What ECB will do, if inflation rises?

Investors cheered the U.S. tax reform plans which decreases corporate tax rate to 20% from 35% and reduce the highest individual income tax rate to 35% from 39.6% combined with good economic growth in the country, U.S. dollar may stand tall against major currencies and Wall Street may also keep staying in green zone.
The inflation in Europe may edge higher by the rising of CPI in forecast but I suggest seeing the actual data at 16.00 on Friday. If it is higher than expected, euro may drop lower because inflation raise and greenback is steady. In my opinion, CPI will be one of the indicators that ECB will consider for the next meeting in October and Draghi may need to reduce the QE in EU. It will affect bond yield in European countries and other countries included the United State.
Moreover, today is the big day of United Kingdom, as the GDP of second quarter will release at 15.30 and a head of the BOE's Monetary Policy Committee (MPC), which controls short-term interest rates, will speak at 21.45. Carney may signal some future policy for the Brexit. However, I think GBP may not be able to rise highly soon as it may wait till the conclusion of Brexit from EU. Major stock markets may keep staying in green zone, especially if the war tension will not increase.
Falling crude oil inventories in USA and OPEC policy may support oil prices in long-term. But gold price may slightly go down because of the steady dollar and eased tensions. I still suggest keeping eye on North Korea tension as everything can happen and it may have a strong effect on the world market.

By Niramon Nitnitiphruet
Financial analyst, Olymp Trade

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