Chris Turner at ING argues the ECB is unlikely to drop its tightening rhetoric but, even when a second September hike is perhaps a mistake. He notes the ECB needs to speak powerful to handle inflation dynamics, protecting one hike priced by early subsequent 12 months, and warns EUR/USD may revisit the 1.1325 lows on Kevin Warsh’s feedback.
ECB stance retains Euro underneath stress
“As our staff have been discussing this week, we expect it’s too early for the ECB to desert its tightening rhetoric – although a second hike in September might be a coverage mistake.”
“The ECB script stays that final month’s fee hike was not an insurance coverage transfer, and it sounds just like the ECB needs to speak powerful to experience out this inflation hump and be sure that second-round results don’t emerge.”
“That means market pricing of 1 ECB fee hike by early subsequent 12 months can keep in cash market curves.”
“EUR/USD may make a break again to the 1.1325 lows on Warsh at present.”
(This text was created with the assistance of an Synthetic Intelligence software and reviewed by an editor.)
