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Oil holds above USD 100/bbl as ECB prepares to hike

The ECB is expected to raise the deposit rate by 25 basis points to 2.50%, while the release of US August PPI could carry extra weight for markets because it comes before CPI.

Reported · Written up by our desk · Central Banks

In the euro area, the European Central Bank is set to announce its deposit rate decision, and expectations are for a 25 basis point hike to 2.50%. Action Forex said it also expects ECB President Christine Lagarde to keep full optionality on the future rate path, with no firm guidance, which the outlet expects could limit immediate market reaction.

Oil remained supported, with Brent rising above USD 100 per barrel and holding above that level overnight. Action Forex linked the move to intensifying supply concerns amid the largest wave of US-Iran attacks on shipping since the start of the war, which is affecting vessel flows through the Strait of Hormuz.

Beyond the ECB, Action Forex flagged several upcoming macro catalysts across Europe and the US. In the US, August PPI is due, and the outlet noted that because PPI is released before CPI, it could carry more weight than usual for markets as inflation data unfolds.

For Northern Europe, Action Forex expects Norway core inflation, based on CPI-ATE, to rise to 3.1% year over year from 2.7% in August, citing a base effect after a sharp cut to kindergarten prices last year. In Sweden, the outlet expects July GDP to show a modest month over month decline, while in Denmark it forecasts CPI inflation to rise to 2.2% year over year on higher electricity prices, with underlying price pressures still muted.

Latest closeBrent $102.05 ▲4.2%

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