Lagarde speech: Euro area GDP could fall by between 5% and 12% this year

Eren Sengezer FXStreet

Following the European Central Bank's (ECB) decision to leave its interest rates unchanged, Christine Lagarde, President of the ECB, is delivering her remarks on the monetary policy outlook in a press conference.

Key takeaways

"Euro area facing a recession of unprecedented magnitude and speed in peacetime."

"Measures to contain virus have largely halted activity."

"Economic activity largely halted."

"Surveys have plunged, suggesting sharp contraction in growth."

"Scenarios suggest euro area GDP could fall by between 5% and 12% this year."

"Recovery speed uncertain."

About ECB President Lagarde

The European Central Bank's President Christine Lagarde, born in 1956 in France, has formerly served as Managing Director of the International Monetary Fund, and minister of finance in France. She began her eight-year term at the helm of the ECB in November 2019. As part of her job in the Governing Council, Lagarde holds press conferences in detailing how the ECB observes the current and future state of the European economy. Her comments may positively or negatively the euro's trend in the short-term. Usually, a hawkish outlook boosts the euro (bullish), while a dovish one weighs on the common currency (bearish).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD defies gravity; focus is back to 0.7000

AUD/USD has maintained its bid bias around 0.6970 ahead of the opening bell in Asia on Tuesday. The pair has added to Friday’s rebound, retargeting the 0.7000 hurdle despite another day of firm gains in the Greenback. Looking ahead, Westpac will publish its Consumer Confidence gauge on the domestic calendar.

USD/JPY retakes 158.00 amid hawkish BoJ bets, firmer USD

USD/JPY erases losses and retakes 158.00 in the Asian session on Monday, trading within a one-week-old range. Geopolitical uncertainty continues to underpin the US Dollar, despite fading Fed rate hike hopes, supporting the pair's rebound. However, further upside could be capped by hawkish BoJ expectations and looming intervention risks that could support the Japanese Yen.

Gold treads water around $4,150

Gold now regains some composure and approaches the $4,150 mark per troy ounce late on Monday. The precious metal’s vacillating price action comes in response to the persistent advance in the US Dollar in combination with the resurgence of the upside momentum in US Treasury yields across the curve.

Bitcoin and Gold Outlook: BTC slips, XAU downtrend persists as US Services PMI misses forecasts

Bitcoin (BTC) faces growing headwinds on Monday, as it trades lower below $86,000. Despite the ongoing pullback, the Crypto King remains in a broad range with the lower limit near $84,000 and the upper limit at $88,000. A break on either side of this zone would influence BTC's direction. Gold (XAU/USD), meanwhile, retains a dominant bearish outlook as price action continues downward toward $4,100.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.