Goldman Sachs expectations for the European Central Bank (ECB) at this week's meeting on Thursday.
This summary is via the folks at eFX.
For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.
Highlights:
1. 2513p Hikes Expected: Market anticipations strongly lean towards a 25 basis point (bp) rate hike from both the Federal Reserve and the ECB, suggesting that these potential moves are already priced into market valuations.
2. ECB's Patterned Stance: The firm notes a discernible pattern wherein the ECB's monetary policy stance has been echoing the Federal Reserve's actions, but with a delay equivalent to roughly two meetings. This has been termed as a 'tape delay.
3. Absence of Rate Hike Commitment: For the upcoming July meeting, Goldman Sachs predicts that the ECB will refrain from making an explicit pledge to introduce additional rate hikes. This anticipated stance offers a stark contrast to the ECB's pro-hike narrative from their June meeting. It's more reminiscent of the sentiment shared in the May and June FOMC sessions.
4. EUR/USD Forecast Unchanged: Goldman continues to project the EUR/USD exchange rate to hover around 1.10 by the end of the year. They acknowledge the currency pair's recent fluctuations, with the latest deviations described as the "most serious" yet. Nonetheless, Goldman believes that the subsequent weeks will underscore the Eurozone's adherence to its policy trajectory, affirming it isn't trailing significantly.
