EUR/USD just avoided stepping on a banana skin
A really quick preview of the European Central Bank and a few other bits and bobs from HSBC
On Friday, HSBC noted:
- The EUR is pushing higher against the USD this morning with no ECB speakers to distract and German politics not yet a hindrance
They remark on the ECB:
- The push above 1.20 in EUR/USD had seen the ECB step up its rhetoric reminding markets that a strong currency would have a dampening effect on inflation and warranted monitoring.
But when there are no ECB speakers on deck:
- leaving the EUR uninhibited.
On the upcoming meeting this week (Thursday):
- A Bloomberg survey ... shows 50% of respondents expect the ECB to announce a formal end date for QE at its June meeting (compared to 38% last month) reflects the hawkish shift in market expectations.
On German politics the bank had warned of a
- "potential modest banana skin lies in wait for EUR bears over the weekend on the political front. Germany's SPD will hold a conference to vote whether the party should enter formal negotiations with the CDU/CSU to form a grand coalition. The EUR rallied recently in response to signs that a coalition was a step closer"
As we know, the coalition talks took another step forward: Germany's Social Democrats back formal coalition talks with Chancellor Merkel