EUR: ECB communication and PMIs shape outlook – TD Securities

FXStreet Insights Team FXStreet

TD Securities highlights the ECB Watchers’ Conference as a key platform for policymakers to discuss geopolitical risks and Eurozone monetary policy. The bank expects officials to reiterate that the ECB is ready to act but needs more time to assess risks. Diverging March PMIs in France and Germany show weaker French services and stronger German manufacturing, with rising input costs but limited pass-through to consumers so far.

ECB stance and mixed Eurozone PMIs

"This year's ECB Watchers' Conference will give Lagarde, Lane, Rehn, and Kocher a platform to further expand their views on current geopolitical events and how these may affect euro area monetary policy in the medium term. Although the conflict has evolved since the projections that were presented at the meeting on the 19th, it is anticipated that all members present will echo Lagarde's position: the ECB stands ready to act but believes more observation is necessary to evaluate any risks. The Governing Council is in a stronger situation than in 2022, which allows them extra time to reach an informed decision."

"March business activity across the euro area’s two largest economies diverged: France’s services sector saw a sharper contraction, with the PMI falling to 48.3 (TDS/mkt: 49.0) as demand weakened amid geopolitical uncertainty and pre-election caution, while German manufacturing experienced its strongest production growth in over four years, with the PMI rising to 51.7 (TDS: 49.0; mkt: 49.5) driven by increased orders linked to the Middle East conflict and stockpiling efforts. Both economies faced surging input costs, especially for energy and materials, but firms in neither yet showed signs of pass-through to consumers, temporarily easing monetary policy concerns. Jobs were cut more quickly and replaced more slowly in both countries, and sentiment across firms unsurprisingly saw a pronounced downturn in response to the Iran conflict uncertainty."

(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 keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.