On Tuesday, the ECB again exhibited its penchant for leaking market-moving information about monetary policy to Reuters when three unnamed sources tipped a hawkish lean in June.
To be sure, that’s not entirely surprising. With “batshit populist president” risk now seemingly off the table in France thanks to Emmanuel Macron’s daunting lead in the polls ahead of next month’s runoff, Draghi and co. are running out of excuses when it comes to delaying policy normalization (well, unless of course you think core inflation matters).
Indeed, Thursday’s ECB meeting will be eyed closely for any hint of hawkishness and all of the speculation is just adding to the growing list of reasons to be bullish on the single currency, which just hit a fresh five-month high of 1.0951:
Well, a bit of early morning profit-taking (and subsequent broad dollar strength) notwithstanding, one strategist thinks the best way to play any risk-on event (including Trump’s tax proposal) is now the euro. More below…
Via Bloomberg
Latest rally in the euro post-France vote, coupled with expectations for a hawkish ECB Thursday, push vol skew further up, opening the way for the currency to test 1.1000 handle versus the dollar, Bloomberg strategist Vassilis Karamanis writes.
- The gauge closed Tuesday above par for the first time in almost a month
- EUR/USD rises a fifth day, set for its longest winning streak in eight months; up +0.2% at 1.0945
