ECB: Inflation expectations and household demand – BNY

FXStreet Insights Team FXStreet

BNY’s Geoff Yu highlights that the ECB is heading into its blackout period with a rate hike effectively locked in, as Eurozone households’ 12‑month inflation expectations remain above 3%. However, he warns against treating this as a repeat of 2022, stressing that services PMIs show contracting demand and that households are already tightening via weaker consumption.

Households tighten as ECB prepares

"The ECB enters its pre-decision blackout period today."

"Given that anchoring inflation expectations is central to the Governing Council’s mandate, a hike on Thursday is all but confirmed."

"Nonetheless, we believe the Governing Council should not automatically see this as a repeat of 2022, and any attempt to draw immediate parallels risks further policy error."

"A key point of debate – which is already happening for the Bank of England – is whether the tightening already priced in has helped tighten financial conditions and “bought” central banks some time as household expectations shifted."

"The latest round of services PMIs confirms this view, with almost every single Eurozone economy showing a contraction, indicating a sharp decline in household demand as cost-of-living pressures weigh."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD eyes 0.7150 barrier nine-day EMA

AUD/USD inches higher after registering modest losses in the previous day, trading around 0.7130 during the Asian hours. The technical analysis of the daily chart indicates that the pair is moving sideways within the rectangle pattern, suggesting a consolidation as neither the bulls nor the bears have enough momentum to take control of the market.

USD/JPY trades below 160.00 intervention threshold; bullish bias intact

The USD/JPY pair attracts some sellers during the Asian session amid fears that authorities will step in again to prop up the Japanese Yen. Furthermore, the Israel-Lebanon truce prompts some profit-taking around the US Dollar and exerts downward pressure on the currency pair.

Gold defends 200-day SMA, rises toward $4,500

Gold is attempting a tepid recovery toward $4,500 on Thursday, as renewed optimism in the Mideast geopolitical front calms market nerves. This cautious optimism across Asian markets weighs on Oil prices, and diminishes the US Dollar’s safe-haven appeal, helping Gold stage a decent comeback from the weekly low of $4,424.

Hyperliquid: ETF demand, capital rotation fuel HYPE rally as Bitcoin melts

Hyperliquid price sustains an upward trend near its all-time high of $75.76 on Thursday after posting 80% gains in May, while Bitcoin (BTC) retraces below $65,000, triggering a market-wide panic.

Kevin Warsh takes the Fed helm: What it means for the US Dollar

The Federal Reserve moves away from the highly predictable "forward guidance" model of the Jerome Powell era to a new “Kevin Warsh environment”, characterized by less communication, more policy surprises, and an increased focus on the Fed's complex balance sheet.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.