EUR/USD Gains Ground in Asian Session
- Dovish Fed Remarks Weigh on USD
- HSBC Analysts Predict ECB Rate Cuts
The EUR/USD pair is trading stronger near 1.1140 in Thursday’s Asian market, supported by a weaker US Dollar. The Federal Reserve (Fed) officials, including Fed Chair Jerome Powell, are scheduled to speak today. Additionally, key US economic data such as Initial Jobless Claims, Durable Goods Orders, and Q2 GDP will be released.
Fed’s Future Rate Cuts
Traders are awaiting signals on the Fed’s future rate cuts. Analysts anticipate another substantial rate cut in the November meeting. The recent comments from Fed officials suggest a willingness to ease monetary policy further to support the economy. Any dovish remarks could lead to a significant interest rate cut, weakening the USD against the Euro.
ECB Rate Cut Expectations
Recent data showing a contraction in Eurozone business activity has raised speculations about the European Central Bank (ECB) cutting rates again. HSBC analysts now predict a series of 25 bps rate cuts at every ECB meeting from October to April next year, based on weakening economic indicators.
Understanding ECB
What is ECB?
The European Central Bank (ECB) in Frankfurt, Germany, serves as the reserve bank for the Eurozone. It is responsible for setting interest rates and managing monetary policy to maintain price stability, aiming to keep inflation around 2%.
ECB Tools: QE and QT
During extreme situations, the ECB can utilize Quantitative Easing (QE) to purchase assets and provide liquidity to financial institutions. QE typically leads to a weaker Euro. On the other hand, Quantitative Tightening (QT) is implemented post-QE to control inflation by reducing asset purchases, which can strengthen the Euro.
Stay informed about the ECB’s decisions and their impact on the Eurozone economy to make well-informed financial decisions.