ING: The EUR
The euro went on a small rollercoaster yesterday as the European Central Bank held rates. The statement initially came across as slightly dovish, with a reference to financial conditions weighing on inflation and growth. But President Christine Lagarde then delivered a few hawkish remarks in the press conference that propped up the euro. Lagarde said a hike was discussed at the meeting and hinted that the direction of travel remains towards further tightening. She also gave no indication that French bonds are prompting any dovish rethink at the ECB. Finally, the customary tip to the media a few hours later indicated that officials are “ready” to raise rates in December. That was another clear endorsement of rate expectations and has left the euro better supported. The side note was Lagarde's resignation, effective 7 February, which brings forward the announcement of her successor by a few months. Pablo Hernández de Cos (dove) and Klaas Knot (hawk) are the frontrunners. Should the former be announced, it could bring some downside risks to the euro. Today, we’ll take a look at third-quarter GDP data in the eurozone. We expect a slightly stronger-than-consensus 0.3% quarter-on-quarter
The euro went on a small rollercoaster yesterday as the European Central Bank held rates. The statement initially came across as slightly dovish, with a reference to financial conditions weighing on inflation and growth. But President Christine Lagarde then delivered a few hawkish remarks in the press conference that propped up the euro. Lagarde said a hike was discussed at the meeting and hinted that the direction of travel remains towards further tightening.
She also gave no indication that French bonds are prompting any dovish rethink at the ECB. Finally, the customary tip to the media a few hours later indicated that officials are “ready” to raise rates in December. That was another clear endorsement of rate expectations and has left the euro better supported. The side note was Lagarde's resignation, effective 7 February, which brings forward the announcement of her successor by a few months.
Pablo Hernández de Cos (dove) and Klaas Knot (hawk) are the frontrunners. Should the former be announced, it could bring some downside risks to the euro. Today, we’ll take a look at third-quarter GDP data in the eurozone. We expect a slightly stronger-than-consensus 0.3% quarter-on-quarter print.
France will be monitored closely: we expect 0% growth (consensus 0.1%), and a negative figure here could cause some fresh widening in spreads. We see a decent chance of EUR/USD re-exploring the 1.120-1.1250 area, as the dollar faces downside risks related to AI stocks and US midterms.