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Aug 04 - 10:55 AM

EUR: Recession Risks To Weigh On EUR; Targeting EUR/USD At 0.99 In Q3 - CIBC

By eFXdata  —  Aug 04 - 09:30 AM

CIBC Research discusses the EUR outlook and maintains a bearish bias through Q3.

"The ECB has finally moved on from policy precommitment. The 50bp hike, the first since 2011, has taken the deposit rate out of negative territory for the first time since mid-2014. Having junked forward guidance, we expect the bank to return to data-dependence. While the ECB is likely to tighten by an additional 50bps in September, its window to continue on that path is limited amidst rising recession risks," CIBC notes. 

Costly natural gas prices and ongoing supply threats leave the eurozone facing elevated recession risks. A data dependent ECB may look to tighten again at its next meeting. However, recession concerns and fragmentation risks, due to rising credit concerns, point towards early December 2002 EUR/USD lows at 0.9863 remaining in view," CIBC adds. 

Source:
CIBC Research/Market Commentary

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