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Oct 13 - 10:55 AM

Credit Agricole: Exploring EUR's Path Next Week – Can ECB Speakers Steer its Direction?

By eFXdata  —  Oct 13 - 09:30 AM

Synopsis: The forthcoming week for the Eurozone will witness a lighter-than-usual economic calendar. Noteworthy events include the unveiling of October's German ZEW and the final CPI data for September. Additionally, statements from various ECB dignitaries, including its President, Christine Lagarde, will garner significant attention. These remarks are anticipated as FX investors position themselves in preparation for the October policy assembly. Speculations about potential policies designed to reduce excess liquidity in the Eurozone, such as increased bank reserve requirements, are rife. Such measures, if taken, could lead to a scenario where the Euro is in short supply, potentially giving it a liquidity premium, especially when compared against less liquid currencies.

Key Points:

  1. Light Eurozone calendar next week with German ZEW for October and September's final Eurozone CPI as highlights.
  2. Statements from ECB speakers, especially President Christine Lagarde, are awaited as FX investors position pre-October policy meeting.
  3. Speculation revolves around ECB measures to curtail Eurozone's excess liquidity.
  4. Measures like heightened bank reserve requisites could make the Euro scarce, allowing it to trade at a liquidity premium versus less liquid counterparts.

Conclusion: While the next week doesn't offer many economic releases from the Eurozone, the potential policy shifts from the ECB, especially around liquidity measures, are of significant interest to FX investors. Should the ECB hint at draining excess liquidity, the Euro might experience a surge, particularly against less liquid currencies.

Crédit Agricole Research/Market Commentary


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