Deutsche Bank analysts describe EUR/USD weakness as European spreads widened and bank stocks sold off. The Euro fell sharply against the Dollar, while markets questioned whether the European Central Bank could deliver another rate hike this year.
ECB repricing weighs on Euro
“Financial stress led to growing doubt whether central banks like the ECB could hike rates as aggressively as thought.”
“Tighter financial conditions would do some of the work for them in bringing down inflation, and the selloff also raised doubts as to whether the economy could cope with another hike.”
“So when it came to ECB pricing, the number of further hikes priced by December’s meeting fell -6.1bps on the day to 23.5bps.”
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