ECB: Hawkish communication on good grounds – Nomura

Analysts at Nomura suggest that hawkish communications from ECB officials this week have surprised the market, but their optimistic stance is on good grounds, in Nomura’s view.

Key Quotes

“A strong recovery in wages may be behind their optimistic stance. Even though wage momentum has been weaker than the jobless rate implies, we may be finally seeing the recovery. Negotiated wage rises in Q1 accelerated to +1.86% from 1.56% the previous quarter. ECB officials’ confidence in the Phillips curve may be now higher, as wages finally begin to react to the positive economic fundamentals.”

“ECB officials’ recent hawkish communication is partly intended to send a message that ECB policy will not be affected by Italian politics, but Mr Praet’s comments suggest the ECB’s view on inflation is also improving. Markets became too pessimistic on the pace of ECB normalisation, on both the timing of QE termination and rate hikes. As we have been expecting, ECB QE looks very likely to be terminated by year-end, which could open the door to a rate hike from mid-2019.”

“Further EUR recovery now looks likely into the ECB meeting and its annual gathering in Sintra, as we expect the ECB to maintain its optimistic communication on the back of the stronger wage and inflation data.”

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD battles with 1.0800, lower lows still likely

Another batch of dismal German data alongside looming risk-off sent EUR/USD to a fresh multi-year low of 1.0784. Recovery unlikely in the current scenario.


AUD/USD nears 0.6661, an over one-decade low

Dovish RBA Minutes and coronavirus concerns of economic growth weighed on the Aussie. Westpac Leading Index coming up next.


Altcoins push hard not waiting for a Bitcoin reaction

The Altcoin market has only needed one business day to see prices rise sharply again. Bitcoin, still, has adopted the anchor function and for the moment is giving up the battle for the $10000.

Read more

Gold firmer, near $1,600/oz on coronavirus fears

Renewed fears around the Chinese coronavirus (COVID-19) have been supporting the demand for the safe haven metal in past hours, taking the ounce troy to levels just shy of the key $1,600 mark.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info