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Hawkish ECB Minutes Supporting Euro.

Hawkish ECB Minutes Supporting Euro.

The European Central Bank is becoming increasingly restive on its monetary policy stance and looks keen to normalise interest rates in the face of surging Eurozone inflation, which could offer the Euro support over coming weeks.

The Euro gained after the release of the minutes of March’s policy meeting on Thursday, which showed increasing concerns that current ultra-low interest rates were inappropriate given the surge in inflation, which is expected to now average 5.1% in 2021. With member pressure being mounted on ECB President Christine Lagarde to act, an expected rate hike should commence but it will be her tone taken in the aftermath which markets will be paying more attention to. 

In level terms, the firmer tone in the dollar has seen the EUR/ USD opening this morning back near the 1.0855 mark with Cable (GBP/USD) also changing hands back closer to the 1.3035 area. GBP/EUR, albeit overall very much higher, has fallen since market open to trade just above the 1.20 level.  

Datawise and ahead today, there is a barren data schedule across the board, suggesting we could get a quiet end to the week in the markets. On Sunday, euro watchers will pay attention to the first round of the French Presidential Election where both President Macron and Marine le Pen are expected to progress to the second round, setting up a re-run of the 2017 election.

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