Euro: ECB guidance could keep range intact against US Dollar – DBS
Philip Wee at DBS Group Research expects the European Central Bank to keep its deposit rate unchanged while signalling a possible December hike. He suggests the ECB will use the breathing space from France’s rating affirmation to focus on its 2% inflation target. A balanced message from Christine Lagarde is seen stabilizing EUR/USD within the recent 1.11–1.13 range.
ECB stance anchors Euro trading band
"Today, the European Central Bank is likely to leave its deposit facility rate unchanged at 2.50%, while keeping the door open for a December hike."
"The ECB is likely to seize the breathing space afforded by Moody’s affirmation of France’s Aa3 sovereign debt rating to prioritise the return of inflation to its 2% target."
"ECB President Christine Lagarde will need to reinforce the ECB’s inflation-fighting credentials without appearing complacent about France’s fiscal vulnerabilities."
"A balanced message should help stabilize EUR/USD within this month’s 1.11-1.13 trading range."
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