S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
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STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
ING’s Francesco Pesole notes that the European Central Bank (ECB) held rates steady but delivered hawkish signals, with President Christine Lagarde hinting at further tightening and officials reportedly ready to raise rates in December. While Lagarde’s upcoming departure and the choice of her successor pose potential downside risks to the Euro, Pesole sees scope for EUR/USD to revisit the 1.1200–1.1250 area amid growing downside risks to the US Dollar.
ECB signals further tightening ahead
“The euro went on a small rollercoaster yesterday as the European Central Bank held rates. The statement initially came across as slightly dovish, with a reference to financial conditions weighing on inflation and growth. But President Christine Lagarde then delivered a few hawkish remarks in the press conference that propped up the euro.”
“Lagarde said a hike was discussed at the meeting and hinted that the direction of travel remains towards further tightening. She also gave no indication that French bonds are prompting any dovish rethink at the ECB. Finally, the customary tip to the media a few hours later indicated that officials are “ready” to raise rates in December. That was another clear endorsement of rate expectations and has left the euro better supported.”
“The side note was Lagarde’s resignation, effective 7 February, which brings forward the announcement of her successor by a few months. Pablo Hernández de Cos (dove) and Klaas Knot (hawk) are the frontrunners. Should the former be announced, it could bring some downside risks to the euro.”
“We see a decent chance of EUR/USD re-exploring the 1.120-1.1250 area, as the dollar faces downside risks related to AI stocks and US midterms.”
