Too much ECB rate easing for 2024 – ING

The ECB announces its rate decision today at 1415CET. The deposit rate is expected to be cut by 25bps to 3.50%, while in a technical adjustment the main refinancing rate will be cut by 60bps, notes Chris Turner, FX strategist at ING.

EUR/USD to enjoy a modest jump towards the 1.1080 area

“Our core view today is that the ECB will not provide the market with enough information (be it forward guidance or new economic forecasts) to justify cutting prices by around 11bp for the October 17 meeting. Our home view remains 25bp rate cuts today and December 12th. If we are right, EUR/USD should be able to enjoy a modest bounce towards the 1.1080 area.”

“Elsewhere, we have a speech by Swiss National Bank Acting President Thomas Jordan today at 1625CET. He is speaking at a Swiss Bankers Association event. It is not clear that he will approach monetary policy in his speech, but we are very surprised to see the market price in 32 bps of rate cuts for the September 26 meeting.”

“We highly doubt it would cut by more than 25bps because, with an already very low policy rate (1.25%), it has much less room to cut. In addition, the economy has performed quite well. EUR/CHF could recover today if the short end of the Euro curve returns to the ECB today. But we imagine it would meet sellers in the 0.9450 area.”