An improving macro backdrop and continued policy tightening from the ECB portend Euro strength in 2023, according to economists at CIBC Capital Markets.
ECB is looking at adjusting policy in 50 bps clips
“The improved macro backdrop comes as the ECB now details that ‘rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target.’ Breaking down the language suggests that the bank is looking at adjusting policy in 50 bps clips, at least across Q1.”
“Overall, we would be wary of EUR gains proving potentially over-extended, albeit we would expect any correction to be short-lived.”
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