More from ECB’s Schnabel: Another cut would require significant inflation deviation

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  • ECB is in a good place.
  • Plan is to reduce monetary policy bond portfolios to zero.
  • Euro strength concern to impact prices exaggerated.
  • The economy is resilient.
  • Growth outlook risks are balanced.
  • ECB becoming more accommodating.

She generally leans more on the hawkish side. She sounds like the easing process for her is done already and she would need “significant inflation deviation” to force her to reconsider her current stance.

The market is pricing 20 bps of easing by year-end but that might not come to fruition if conditions improve in the next months and especially if we get a US-EU trade deal.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

ECB’s Schnabel: The threshold for another rate cut is very high

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  • No risk of sustained inflation undershoot
  • Concern about impact of euro strength on prices is exaggerated
  • Economy is resilient, growth outlook risks are balanced
  • Policy is in a good place

This just reaffirms that the central bank is looking to pause on rate cuts through the summer. Traders are pricing in ~97% odds of no rate cut for July with only a ~38% probability of a rate cut for September currently.

This article was written by Justin Low at www.forexlive.com.

European indices hold lower at the open awaiting tariff developments

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  • Eurostoxx -0.5%
  • Germany DAX -0.6%
  • France CAC 40 -0.5%
  • UK FTSE flat
  • Spain IBEX -0.4%
  • Italy FTSE MIB -0.6%

At the start of the week, things were hopeful as the EU and US aimed for a makeshift deal as negotiations look set to extend further. But come today, suddenly the situation is in limbo as Trump yesterday said he will be sending a letter to the EU today. We’ll have to see what becomes of that and the tariffs rate next. US futures are also lower today, with S&P 500 futures seen down 0.4% currently.

This article was written by Justin Low at www.forexlive.com.