EUR/USD to sink towards 1.10 in 2022 as laggard ECB dampens euro sentiment – CIBC
|Economists at CIBC Capital markets expect the euro to depreciate as the Federal Reserve outguns the European Central Bank (ECB) on both tapering bond purchases and raising rates.
ECB to maintain bond purchases into 2023
“The 16 December ECB meeting is likely to prove pivotal to the EUR’s 2022 trajectory. The meeting is accompanied by updated forecasts, including inflation (HICP), out to 2024 for the first time. The view that core prices will be relatively well behaved will help maintain medium run ECB policy inertia.”
“While hawks and doves will debate the medium term assumptions, we expect them to maintain bond purchases well beyond the end of next year.”
“In view of the ECB sequencing assumptions, that would leave rates on hold well into 2023, in contrast to the US. That policy gap underscores why we continue to favour EUR underperformance versus the USD, and look for EUR/USD retreating towards 1.10 in 2022.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.