|

ECB: Will Draghi surprise again? – Nordea Markets

Jan von Gerich, analyst at Nordea Markets, expects that the ECB will extend its forward guidance, however markets are already pricing a clear probability of a further rate cut from the ECB hence it should not be a major market mover.

Key Quotes

“Extended forward guidance could still add some downside pressure on the euro and EUR rates.”

“We see risk/reward tilted towards a market reaction with a slightly stronger EUR and higher EUR rates, although Draghi has proved many times that he can be more dovish than the markets expects. This time it will be harder; markets expect a rate cut, very negative outlook for the euro area is already priced in and we expect the TLTRO-III terms to be less appealing than the TLTRO-II terms.”

“Further, Draghi is unlikely to open the door more to rate cuts compared to what he already did in April, while the conclusions on the ECB’s review on the possible side effects of negative rates will probably not be ready yet.”

Author

Sandeep Kanihama

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

More from Sandeep Kanihama
Share:

Editor's Picks

Crypto Today: Bitcoin, Ethereum, XRP run into resistance as retail buying cools
Cryptocurrencies are broadly consolidating on Thursday, while Bitcoin (BTC) retreats toward support at $64,000. Ethereum (ETH) hovers below $1,800, with its upside seemingly limited, following a macro-driven rally. Meanwhile, Ripple (XRP) sits on top of the reclaimed $1.10 support, reflecting the broader cool-down in the market.
A win for England: First half growth on positive track, keeps pound buoyant
The pound is edging lower on Thursday, after Wednesday’s stunning rally on the back of reports that current home secretary Shabana Mahmood is set to become Chancellor next week. This is easing fears that the hard left of the Labour party will have control at the Treasury. GBP/USD is higher by nearly 1% this week, although it is pulling back from the $1.3550 level this morning.
-0.4%: Why the biggest CPI drop since 2020 couldn't buy back a single cut

The June CPI fell 0.4% on the month, the largest one-month decline since April 2020, dragging the annual rate to 3.5% from May's 4.2% and snapping a three-month acceleration streak. Core prices went nowhere, flat on the month and down to 2.6% YoY, both under consensus.