ECB week and ECB sources "leaks". What else is new. After the report here, markets have adopted the narrative that the ECB is going to hike rates by 50 bps this week instead of the proposed 25 bps that policymakers have been touting in the past two months.
As things stand, money markets have now priced in ~60% odds of a 50 bps rate move this week and have increased bets of a 100 bps move by September i.e. back-to-back 50 bps rate hikes.
The euro is gaining strongly on the pricing move with EUR/USD now up over 1% to 1.0248 on the day. The break higher is also helped from a technical perspective as outlined here.
The dollar has dropped across the board as it faces another wave of selling with GBP/USD up 0.5% to 1.2020 and contesting a push back above 1.2000. meanwhile, AUD/USD is up over 1% as well to 0.6885 and is looking poised to retest 0.6900 again.
