On Thursday meeting, the European Central Bank (ECB) will likely keep interest rates unchanged, but ECB President Christine Lagarde may make a comment that will cause volatility in EUR/USD, Commerzbank FX analysts Ulrich Leuchtmann and Michael Pfister note.
Lagarde comments may cause volatility in EUR/USD
“Interest rates will most likely remain unchanged. A major change in the general outlook is also unlikely. After the ECB committed to a rate cut before the June meeting and then had no choice but to follow through in the face of higher inflation rates, it will probably want to avoid making too clear a commitment this time.”
“Accordingly, one might expect the meeting to be rather unspectacular. Nevertheless, the jump in implied volatility is higher than in June. This is probably simply because everything was a foregone conclusion before the June meeting. The market probably knew that not much more than a rate cut would be announced. Today is different.”
“After all, there is always the possibility that ECB President Christine Lagarde will make a comment that will cause volatility in EUR/USD, for example regarding a possible rate cut in September, which our economists expect. So today could still be more exciting than June.”
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