Euro: ECB support offsets Dollar strength – Commerzbank
Commerzbank’s Michael Pfister argues that recent EUR/USD weakness reflects a stronger US Dollar (USD) rather than a fundamentally weak Euro (EUR), as the Euro has outperformed the G10 average. He highlights that softer expectations for European Central Bank (ECB) tightening versus a more hawkish Fed have widened rate differentials. However, the ECB’s proactive June hike and an anticipated September move are seen as supportive for the Euro over the coming months.
ECB front-loading underpins Euro resilience
"The reason for lower EUR/USD levels is quite straightforward: expectations regarding the ECB have eased significantly in the wake of lower oil prices, while expectations regarding the Fed have moved in the opposite direction in light of hawkish comments."
"Expectations regarding the ECB have also been scaled back."
"Our economists strongly anticipate a further interest rate hike from the ECB in September."
"With only 21 basis points of tightening priced in by December, this is likely to provide some support for the euro."
"In the long term, however, the fact that the ECB tightened policy so early on is likely to send a strong signal."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wall Street giants collectively raise rate hike forecasts, US Treasury futures continue to fall, gold drops over 1% to break 4000
After the US October CPI exceeded expectations, Goldman Sachs and Nomura added a forecast for an interest rate hike in March next year, while Deutsche Bank included a forecast for a rate hike in January next year. Currently, the market has fully priced in a 25 basis point rate hike in December, with a 13% probability for a 50 basis point hike. On Wednesday, the US Treasury spot market was closed, but Treasury futures continued to fall, with corresponding yields rising by about 2 to 4 basis points, and spot gold came under pressure, dropping by 1.1%.
No Need to Worry About the Cooling Down of AI Data Center Construction? The US Import Boom Is Unlikely to Subside in the Short Term, Real Impact May Come in 2029
It takes an average of 4.8 years from finalizing investment to starting construction of a data center project, and an additional 2.6 years from construction start to becoming operational. Servers usually cannot be installed until after the building structure and racks are completed. For trade partners such as Taiwan (China), South Korea, and Mexico who rely on US data center supply chain demand, the inertia in construction timelines provides at least a one- to two-year buffer for future exports.
Federal Reserve Major Debate: When Should the Tenure of “Number Three” Williams End?
The main point of contention is whether Williams should step down in June 2028, upon completing a full 10-year term, or in June 2027, when he reaches the mandatory retirement age of 65. Analysts point out that the Federal Reserve Board holds ultimate discretion; if he leaves early, Fed Chair Waller would be able to assert greater control over the appointment to this critical position. However, forcing Williams to shorten his term could easily be interpreted as political manipulation. Williams himself is expected to serve until June 2028.
Crypto prices
More
