EUR: Rate cut dissent emerges – ING

The minutes of the June European Central Bank (ECB) meeting, published yesterday, showed some members did not agree with cutting rates, ING FX analyst Francesco Pesole notes.

The Euro is set to move within the 1.08/1.09

“It is increasingly clear that the June move was a consequence of a series of pre-commitments, rather than a strong intent to start an easing cycle. Indeed, the minutes confirm the centrality of data dependency at this stage, with particular focus set to be on wages, whose stickiness is keeping many EBC members on the cautious side when discussing further easing.”

”At the same time, there appears to be growing confidence in the ECB’s staff economic projections by the Governing Council. Those projections remain rather optimistic on disinflation by end-2025, and will in our view justify two more rate cuts by the ECB this year. Market pricing is less dovish, at 38bp.”

“EUR/USD may move within the 1.08/1.09 range today, and we think the lingering risk of a re-widening in French bond spreads after Sunday’s second round election mean the upside remains capped.”