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Markets trim expectations for more ECB rate hikes

MUFG said Euro-zone financial conditions have tightened in an unwanted way, shifting pricing toward only two further ECB moves.

Reported · Written up by our desk · Central Banks

MUFG analyst Lee Hardman says unwanted tightening in Euro-zone financial conditions is leading markets to dial back expectations for additional ECB rate hikes, according to FXStreet.

FXStreet reports that market pricing has moved closer to MUFG’s view of two more ECB moves, though Hardman cautioned they could prove too aggressive if fragmentation risks intensify.

The report also notes growing speculation that the ECB may slow quantitative tightening, or activate its Transmission Protection Instrument.

In FXStreet coverage of related currency moves, it said AUD/USD fell toward 0.6900 as the US dollar firmed, while USD/JPY erased earlier losses to retake 158.00.

Latest closeUSD/JPY 157.83 ▲0.2%

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