Institution: The selection of the European Central Bank president will impact the euro’s performance
智通财经2026/11/05 10:08Show original
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- ING's Francesco Pesole stated that the Netherlands has officially supported Klaas Knot in his bid for ECB President, after which Knot delivered a speech with a distinctly hawkish stance.
- Knot believes that second-round inflation effects may rise, and that the European Central Bank needs to respond to minor shocks driving inflation higher with higher interest rates.
- Another frontrunner, Pablo Hernández de Cos, has long been seen as dovish, and the market is awaiting his comments.
- The institution believes that if Knot is appointed, given his hawkish stance, it will be a positive event for the euro.
- Meanwhile, eurozone inflation in October accelerated from 3.8% as expected to 4.0%, while core inflation remained stable at 2.5%.
- The macro team at the institution believes this brings the European Central Bank closer to a rate hike in December.
- Due to falling oil prices, the previous day saw the 2-year EUR/USD swap rate spread widen, which is negative for the euro.
- A similar dynamic occurred in summer when oil prices dropped to $70, which prevented EUR/USD from rising.
- At least one more rate hike, most likely in December, now appears certain, providing greater support for eurozone interest rate expectations.
- However, this interest rate factor, combined with lingering French risks, makes the institution less optimistic about a breakout to the upside for EUR/USD.
- The institution continues to believe that upside for EUR/USD above 1.1300 is limited, with 1.1300 as its year-end target.
- Overall, the ECB president's stance and inflation data jointly affect euro pricing, but French risks are capping gains for the euro.
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