ECB Hawkishness Fails to Boost Euro Against Dollar
European Central Bank (ECB) commentary has remained broadly hawkish in recent times, with limited pushback from the dovish camp. This is according to ING's Francesco Pesole, who notes that three policymakers made public appearances yesterday, reaffirming their hawkish stance.
Gabriel Makhlouf, a neutral-to-hawkish policymaker, said that every meeting is a 'live' one, leaving the door open for an October hike. Ante Zigman, considered more hawkish than others, emphasized the resilience of growth and the need to bring inflation lower.
Olli Rehn, one of the most dovish voices on the Governing Council, took a more neutral tone but did not push back against market expectations. Pesole points out that all three policymakers stated there is no evidence of second-round effects, which remains somewhat inconsistent with the prevailing hawkish narrative and guidance.
Despite this, ING does not expect any shift in tone in the near term. Pesole also notes that front-end US rates could still move higher in the coming weeks, particularly around key data releases, while the broader commodity and risk backdrop continues to point to downside risks for EUR/USD.