TD Research discusses its expectations for tomorrow’s ECB policy decision.
“The outcome is near a coin toss, but ultimately we sit (just) on the 50bps hike side for September’s decision.
Both outcomes are likely to share the same broad narrative and
end-point; the question is more about a strategy of 75/50/25 vs 50/50/50
hikes for the rest of 2022’s policy decisions,” TD notes.
“EUR risks skew to a larger selloff on a dovish outcome. Markets are pricing in around 65bp for the meeting, so
a 75bp hike could mildly support EUR in the short-term. Still, the
energy outlook is key and points to fading EURUSD rallies, eying a 0.96
level in Q4,” TD adds.
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