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Jun 06 - 10:55 AM

EUR: Vulnerable Around ECB Meeting; Tightening Plans Are Fully Priced In By Now - Credit Agricole

By eFXdata  —  Jun 06 - 10:00 AM

Credit Agricole CIB Research discusses the EUR outlook around this week's ECB policy meeting.

"Ahead of the June ECB meeting, the FX investors expect the Governing Council to put an end to its asset purchases and signal the start of its rate tightening cycle from July. With the Eurozone rates market already pricing in more than 100bps of rate hikes by the end of 2022, however, we think the ECB’s tightening plans are fully priced in by now," CACIB notes. 

"We are further conscious of risks ahead for the EUR ahead of the June policy meeting that relate to a potentially more aggressive downgrade of the ECB’s economic projections as well as lack of commitment by the Governing Council to ‘close the spread’ in the event that the monetary policy tightening threatens a fragmentation in the Eurozone periphery. Taking all this into account, we think that the EUR could be vulnerable if the ECB fails to exceeds the already hawkish market expectations," CACIB adds. 

Source:
Crédit Agricole Research/Market Commentary

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