The European Central Bank (ECB) is set to announce its rates decision today at 1415CET. Speculation is high that the deposit rate will be cut by 25bp to 3.50%, with a technical adjustment expected to see the Main Refinancing Rate cut by 60bp, according to ING’s FX strategist Chris Turner.
In a market analysis, Turner predicts that the ECB may not provide enough information to warrant the 11bp easing already priced in for the October 17 meeting. Despite this, ING’s house view remains at 25bp rate cuts today and on December 12. Should this play out as expected, EUR/USD could see a slight uptick towards the 1.1080 area.
Additionally, outgoing Swiss National Bank President Thomas Jordan is scheduled to speak at 1625CET today during a Swiss Bankers Association event. While the content of his speech remains uncertain, the market is already pricing in a 32bp rate cut for the September 26 meeting. However, Turner believes that a rate cut exceeding 25bp is unlikely due to Switzerland’s already low policy rate of 1.25% and a relatively strong economy.
As a result, EUR/CHF may experience a rally if the short end of the euro curve reacts to the ECB’s decision. Nevertheless, resistance may be encountered around the 0.9450 area.
In summary, the ECB’s rate decision and Thomas Jordan’s speech could impact currency pairs like EUR/USD and EUR/CHF. Investors should stay informed of these developments to make informed decisions about their financial portfolios.