Ireland’s Harmonised Index of Consumer Prices (HICP) rose by 0.2% in July, matching market expectations. This shows that consumer prices are stable compared to the previous period. When it comes to financial markets, forward-looking statements can involve risks and uncertainties. It’s important to do thorough research before making any investment decisions, as there can be financial losses. There is no guarantee that the information provided is accurate, timely, or free from errors. This data should not be seen as investment advice. Investing in financial markets carries significant risks, including the potential loss of your initial investment and emotional stress. All associated costs and risks are the responsibility of the investor. The views expressed do not represent the official policy of any organization. The authors claim no bias or compensation beyond the publication platform and do not accept liability for any outcomes from using this information. Errors and omissions may occur. The inflation rate in Ireland for July was exactly as forecasted at 0.2%, indicating consistent price movements. This stability likely means we won’t see unexpected changes in policy from the European Central Bank (ECB) soon, suggesting a period of lower market volatility. This trend is evident across Europe, with the latest Eurostat estimate for July 2025 showing Eurozone inflation steady at 2.3%. With the ECB’s main deposit rate at 3.0%, the bank has room to remain patient. Therefore, the chances of a rate change in September are quite low. Given this outlook, we think implied volatility may be too high in some markets. The EURO STOXX 50 Volatility Index (VSTOXX) is around 15.5, which seems excessive in such a stable macroeconomic environment. We should explore strategies that involve selling volatility on major European indices. Looking back from our current standpoint in 2025, this calmness is a sharp contrast to the turbulent period of 2022-2023. During that time, unexpected inflation data led to sharp market changes and aggressive central bank actions. Now, we see a different environment that rewards patience rather than risky bets. For those trading interest rates, it seems that the front end of the yield curve will stay stable. We should avoid expecting major moves in short-term Euribor futures in the weeks ahead. Range-trading strategies may work better than breakout trades. In currency markets, the euro’s stability stands out against other currencies that face more uncertainty from their central banks. For example, last week’s US jobs report was slightly better than expected, adding uncertainty for the Federal Reserve. This situation may open up relative value opportunities in currency pairs like EUR/USD, where we anticipate less volatility from the euro side.

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