(Kitco News) - There has been a lot of European Central Bank (ECB) talk this morning specifically from Rehn (Finland) and Kazimir (Slovenia). Money markets ramped up their bets on ECB interest rate rises on Wednesday to price in more than 75 basis points of hikes by September. After the Fed and BoE hikes recently the ECB are now under even more pressure to kick start their rate hiking cycle. Many analysts expected the ECB to move higher month to month with 25 basis point increments but today there have been some comments that could through that into question.
ECB's Kazimir said that a half-point September rate hike is "highly probable". This was then confirmed by Rehn who noted that it is "very likely that the September hike will be bigger than 25 basis points". There was then some justification for these comments as Rhen noted that the war in Ukraine weakened the economic outlook driving up inflation. This provided a good reason to expedite the normalization of monetary policy. Kazimir spoke about the future of the Eurozone and said he sees " a technical recession in some Eurozone nations" adding there will be "slower growth in the Euro Area".
EUR/USD is trading 0.40% higher in the European session. The 1-hour chart below shows that the price has moved higher but there is a resistance level at 1.06 where the price could stall. The price action is consistent with the more hawkish talk from the ECB members this morning as traders could be starting to price in a more aggressive stance.
