Could ECB guidance keep the Euro range-bound against the US Dollar? – DBS

A balanced message from Christine Lagarde is expected to steady EUR/USD within its recent 1.11–1.13 range, according to Philip Wee at DBS Group Research. Wee expects the European Central Bank to hold its deposit rate steady while leaving open the possibility of a December hike. In his view, the affirmation of France’s rating gives the ECB breathing space to concentrate on its 2% inflation target.

Can the ECB’s stance keep the Euro within its 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."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)