Published on 26.10.2022 10:48

The Euro is continuing to strengthen today as we get ready to enter today’s European trading session and economic data due out today and tomorrow will dictate if one again the European currency can reach parity with its US counterpart.

Yesterday from the Eurozone there was a round of positive data and business expectations improved modestly in October, but the current assessment declined, leaving the business climate measure virtually unchanged.

The Euro was also helped by disappointing data out of the US as the housing price index hit the market at -0.7 against analysts’ expectations for a figure of -0.3 percent and shows the recent interest rate hikes delivered by the US Federal reserve are starting to have a marked impact on the property market.

The European Central Bank meets on Thursday, and they are expected to deliver a 75 basis point rate hike to one again help reign in inflation which remains stubbornly high and is continuing to pressure households and business conditions.

“We expect the ECB to repeat Sep's 75bps hike at the Oct meeting, taking the Depo Rate to 1.50%, and leaving it arguably in the middle of the range that the ECB considers being "neutral", analysts at TD Securities said.

''While the growth outlook has deteriorated recently, with inflation surging to 9.9%, the ECB will likely emphasize the risk that higher inflation expectations become entrenched.'' They added.

Any rate hikes by the ECB however may only provide limited support for the Euro as market participants await the latest GDP figures from the US on Thursday which are expected to come in at 2.4 percent which is a huge improvement on last month’s figure of -0.6 percent.

If analysts are correct, it will ensure the Fed continues on their aggressive rate hiking cycle and once again see investors snapping up the greenback as a high yielding currency.


FAQ