Euro trades broadly higher today as buying picks up in early European session. It could be seen as late reaction to reports regarding ECB. Markets are fully pricing in a 10bps hike to the deposit rate only in December 2019. Odds of a September 2019 hike is at around 80%. And it’s reported that some ECB policy makers are unhappy with it.
A sticky point is that ECB is clear with its communication that rates will remain at present level at least through the end of summer of 2019. That left markets with some rooms for interpretation on whether it means the end of “September.
But, we’d like to highlight one thing. Fed is clear with its projection of two more hikes this year. And fed funds futures are pricing in only around 50% chance for that. So, in our view, there’s nothing special for ECB officials to be unhappy about.