EUR/USD starting to gain positive traction

Société Générale analysts note that markets are pricing in a 3.5% European Central Bank (ECB) terminal rate following hawkish comments.

EUR/USD is starting to gain positive traction

"A bulging macro release calendar and the prospect of a truckload of new primary bond issuance could herald a furious start to the new year and catch investors flat-footed without much time to digest the switchover from 2022 to 2023 after the impressive round-up of the year last week."

"The race in 10y Bund yields to above 2.50% (IRS 3.20%) and the daily close in EUR/USD above 1.07 stood out on Friday and capped an extraordinary month of December when both the ECB and BoJ shook up the playbook for 2023."

"The hawkish remarks from a number of ECB officials over the festive period but notably from President Lagarde and Schnabel resulted in a significant re-pricing of the terminal rate to 3.50%, an increase of 65bp in one month. Slow to react at first, EUR/USD is starting to gain positive traction as the rhetoric translates into tighter nominal and real Treasury/Bund spreads."

"Croatia may not have anticipated the volatility in bond yields but it still introduced coins and notes yesterday, expanding the club to 20, at funding terms that are still considerably more attractive than those of the other 19 members since 1999."

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.