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ECB hawkish outlook supports the euro despite focus on US PCE
BNY highlights Isabel Schnabel’s view that further ECB rate hikes may be needed, even as Euro area inflation risks remain skewed higher and growth stays more resilient.
BNY’s Geoff Yu said ECB Executive Board member Isabel Schnabel is signaling a hawkish bias, arguing that further rate hikes may still be necessary because Euro area inflation risks remain tilted to the upside. Schnabel also cautioned that waiting for wage effects could leave the ECB behind the curve, supporting the euro even though inflation is expected to stay above 2% for an extended period.
FXStreet noted EUR/USD holding lower ground around 1.1650 in Wednesday’s European session, while the US dollar recovered modestly on profit-taking and Middle East uncertainty. Traders are positioning for US catalysts, with attention on the Personal Consumption Expenditures, or PCE, price index data due at 12:30 GMT.
The same outlook is also showing up in broader dollar pricing, with GBP/USD edging lower below 1.3650 after giving back part of the prior day’s gains. Ahead of the US PCE release, the report also flags another revision to Q2 GDP data and upcoming commentary from Federal Reserve Chairman Kevin Warsh at the Jackson Hole Symposium.
In commodities and related risk assets mentioned alongside the currency setup, gold was down 0.75% near $4,620 as the rally paused after a three-month high near $4,697 the previous day. The article also referenced US PCE inflation for July as the key item investors are waiting to see.
Latest closeGold $4,432.00 ▲1.6%|EUR/USD 1.157 ▲0.4%|GBP/USD 1.354 ▲0.3%