Isabel Schnabel of the ECB now sees growth risks potentially to the upside, and Chris Turner of ING notes that Eurozone data continues to surprise favorably. With EUR/USD predicted to hold 1.1650/60 support and move into the 1.1700/1710 range, this supports forecasts for a 25bp rate hike to 2.50% in September and another move next year.
Euro upside is supported by resilient growth.
"Data announcements from the Eurozone are consistently surprisingly positive. The European economy's resilience in the face of this year's spike in energy costs is the main surprise.
"In fact, Isabel Schnabel of the ECB has suggested today that the ECB may need to characterize growth risks to the upside at the September meeting."
"These remarks can likely maintain market pricing of another 25bp hike into early next year and should solidify expectations for a 25bp rate hike to 2.50% at the September meeting."
"Better growth prospects are obviously excellent news for the euro as a procyclical currency, and barring any upside surprises with the US core PCE data today, we favor EUR/USD holding support at 1.1650/60 and heading back to the 1.1700/1710 range."
Euro upside is supported by resilient growth.
"Data announcements from the Eurozone are consistently surprisingly positive. The European economy's resilience in the face of this year's spike in energy costs is the main surprise.
"In fact, Isabel Schnabel of the ECB has suggested today that the ECB may need to characterize growth risks to the upside at the September meeting."
"These remarks can likely maintain market pricing of another 25bp hike into early next year and should solidify expectations for a 25bp rate hike to 2.50% at the September meeting."
"Better growth prospects are obviously excellent news for the euro as a procyclical currency, and barring any upside surprises with the US core PCE data today, we favor EUR/USD holding support at 1.1650/60 and heading back to the 1.1700/1710 range."
