ING’s Chris Turner highlights a busy week of speakers from the European Central Bank ahead of the lockdown period, with officials signaling willingness to raise interest rates if necessary but preferring more time. Markets have moved away from April 30 and see about a 50% chance of a rate hike in June, which is what ING expects. ING sees a steady state for EUR/USD closer to 1.17.
ECB communication and data-intensive week
“Earlier this week we have numerous speakers from the European Central Bank before the lockdown period begins this Thursday. The main message that continues to come through is that the ECB is ready to act (raise rates) if necessary, but that more time is needed. This means that the market has priced in a rate hike on April 30 and is now probably only about 50% associating it with a rate hike in June.”
“Our team assumes that the ECB will actually raise interest rates in June.”
“Aside from the ECB speakers, the Eurozone calendar is dominated by business and investor surveys. This starts tomorrow with Germany’s ZEW, builds to April Eurozone PMIs on Thursday, and then sees the Ifo on Friday.”
“Business surveys in March were not as bad as they could have been and it will be interesting to see if they have deteriorated much this month.”
“We are a bit cautious on risk at the moment and see a steady state for EUR/USD closer to the 1.17 area.”
(This article was created using an artificial intelligence tool and reviewed by an editor.)
