Euro/Dollar Pair Traders Focus on Policy Signals Ahead of Key Meetings
The euro/dollar pair is trading in a narrow range around 1.162 on September 8, ahead of key monetary policy meetings in the US and Europe.
In the US, the Federal Reserve's meeting on September 15-16 has seen markets price in a 25-basis-point hike, with the implied probability now at about 60% following strong jobs data. The nonfarm payrolls increased by 162,000 in August, exceeding expectations of around 56,000.
The European Central Bank's meeting on September 10 has also seen markets price in a 25-basis-point hike to 2.50%, with the deposit facility rate currently at 2.25%. However, the focus is shifting from rate hikes to policy signals, as investors seek clarity on how central banks will approach inflation and growth.
The ECB's President Christine Lagarde has emphasized that policy will be calibrated meeting by meeting, based on incoming data, and will no longer rely on complex forward guidance. The key variable at the ECB meeting lies in the post-meeting statement, with investors looking for clues on future rate hikes and the timing of inflation returning to 2%.