The Dollar is slightly weaker across the board while the Euro has made gains following reports that some unnamed ECB board members are concerned that markets are not pricing in an ECB rate hike before September or even Q4 2019. There is also seemingly growing speculation that ECB President Draghi may want to deliver a rate hike before his term expires after the October 2019 policy meeting. Bundesbank President Weidmann, a known hawk, speaks today and he may well restate his view that summer 2019 rate hike could be appropriate. EUR/USD temporarily breached 1.17 but remains in the narrow range in place since mid-June and any view about where ECB policy rates will be in 12-18 months time is likely to remain fluid and uncertain at best.
Sterling has also made small gains versus the Dollar ahead of Bank of England Governor Carney’s scheduled speech at 11.00. Markets will be looking for signs that Carney, who voted against a rate hike at the June policy meeting, has inched closer towards favouring an August hike in the wake of recent UK macro data pointing to a (modest) recovery in economic growth in Q2.
