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

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Editors’ Picks

AUD/USD holds the higher ground above 0.6050, focus shifts to US NFP

AUD/USD trades better bid above 0.6050 following upbeat Aussie retail sales data and Chinese Caixin Services PMI. Coronavirus numbers continue rising, keeping markets risk-averse and US dollar broadly underpinned ahead of US NFP. 


USD/JPY holding form following spike in oil markets

USD/JPY is relatively bid in Asia despite the risk-off tones circulating which would usually keep the yen underpinned. The spot rallied on solid US stocks and a spike in oil prices overnight.


US Non-Farm Payrolls preview: If it’s terrible, it’s expected, if it’s not, April will be

Non-farm payrolls for March will show some of the damage though less than the claims numbers as many of the layoffs did not begin until the latter part of the month.

Read more

WTI consolidates recent gains amid fresh challenges to risk-tone

Even if US President Donald Trump reiterated his calls for oil production cuts, WTI remains under pressure around $23.75 amid the Asian session on Friday. The black gold fails to cheer the upbeat signals from the US leader amid risk reset.

Oil News

Gold snaps two-day recovery, stays above $1,600, as trade sentiment sours

Gold fails to extend the previous recovery gains amid fresh challenges to risk. Wuhan Chief cited coronavirus resurgence risk, Washington Governor extends lockdown. S&P keeps US rating/outlook intact, expects a recovery in 2021.

Gold News