ECB Set to Hike Rates Amid Eurozone Economy's Unexpected Resilience

The European Central Bank (ECB) is likely to raise interest rates at its upcoming meeting due to the resilience of the eurozone economy, despite ongoing market turmoil. Some ECB members have already advocated for a rate hike since July, and recent data shows that headline inflation remains above 3% year-over-year.

The eurozone's unexpected resilience can be attributed in part to good luck, as Asian competitors were hit harder by the closure of the Strait of Hormuz and lost orders to European companies. Additionally, long-announced fiscal stimulus has contributed to the economy's stability.

Meanwhile, the US Treasury Secretary, Bessent, has hinted at what Japan is planning to do, although no specific details have been disclosed. In contrast, other countries are experiencing a bond-market selloff, with Japan borrowing less than the US this year. However, the AUD/USD remains unaffected by these developments.