ECB: Another 50 bps rate raise due in March – UOB

Pablo Piovano FXStreet

Economist at UOB Group Lee Sue Ann assesses the latest ECB event on February 2.

Key Takeaways

“The European Central Bank (ECB), at its first meeting of the year, lifted interest rates by 50bps. It also gave more details on how it intends to shrink its EUR5tn bond portfolio, reaffirming a monthly cap of EUR15bn between Mar and Jun on maturing debt that is allowed to expire.”

“The latest decision follows a slew of encouraging economic data, showing a further retreat in inflation and receding chances of a recession in the 20member region. These factors give the ECB room to remain hawkish. But just how far and how fast the ECB will go from there, is still unclear.”

“In line with our current forecasts, the ECB is expected to hike by another 50bps at the next meeting on 16 Mar. This will bring the refinancing rate to 3.50% and the deposit rate to 3.00% by 1Q23. The Mar meeting will also feature a new set of economic forecasts that should heavily influence the ECB’s decision going forward, and we will update our ECB forecasts accordingly then.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.