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- EUR/USD: Disappointing ECB decision to pull the pair firmly below 1.06 – Scotiabank
EUR/USD: Disappointing ECB decision to pull the pair firmly below 1.06 – Scotiabank
EUR/USD has oscillated around the 1.07 level since the start of the month. A disappointing European Central Bank (ECB) decision at its meeting on Thursday could pave the way for a fall below 1.06 during the week ahead, economists at Scotiabank report.
Lagarde unlikely to fan the flames of 50 bps hike bets
“The bloc’s economy expanded by 0.6% QoQ, double the initial estimate, lifting Eurozone yields ahead of tomorrow’s ECB decision. Implied pricing for the bank’s Sep meeting rose by 5bps to near 75bps – implying nearly a full 50bps hike at one of the Jul or Sep meetings.”
“We think Lagarde is unlikely to fan the flames of 50 bps hike bets as the ECB sticks to a gradual forward guidance approach.”
“A disappointing ECB decision, a US inflation beat, and a hawkish Fed next week could combine to pull the EUR firmly below 1.06 in the space of a week.”
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