European Central Bank rate cut bets surge, Euro falls to lowest level since 2022.
The euro fell to its lowest level in two years, with traders betting that the European Central Bank will have to cut interest rates significantly to boost the local economy. Data on Friday showed that the business activities of the two largest economies in the euro area shrank more than expected, causing the euro to fall more than 1% against the dollar to touch a low of 1.0335 since November 2022. The market's implied probability of a 50 basis points rate cut by the European Central Bank next month has surged from around 15% on Thursday to over 50%. "This report does make a 50 basis points rate cut a possibility," said Matthew Landon, global market strategist at JPMorgan Private Bank, adding that shorting the euro is.
The euro fell to its lowest level since 2022, with the market raising the possibility of a 50 basis point rate cut by the european central bank to 50%.
During the US session on Friday, November 22nd, the euro fell by about 1% to $1.0331, its lowest level since November 2022. Data released last Friday showed that the contraction in business activities of the two largest economic entities in the Eurozone was greater than expected. Market suggests that the likelihood of the European Central Bank cutting interest rates by 50 basis points next month has jumped from about 15% on Thursday to over 50%. JPMorgan Private Bank's global market strategist Matthew Landon said, "This report does put a 50 basis point rate cut on the table." He added that shorting the euro was the company's external
European Central Bank Commissioner Centeno: If risks materialize, larger interest rate cuts could be considered.
Mario Centeno, a member of the European Central Bank's Governing Council, stated that if some of the risks facing the regional economy materialize, a discussion about larger rate cuts could be warranted. The Governor of the Bank of Portugal mentioned on Friday that he leans towards 'gradual' action, which he defines as stable and predictable steps. However, with risks like U.S. trade tariffs casting a shadow, more aggressive actions than the 25 basis point cuts that have been implemented so far may be necessary. 'If the data confirms that the risks to growth are materializing and this month's inflation data follows the same trend, we can certainly discuss and remain open to different paces,' he stated.
The euro has hit a two-year low! Economic data is bleak, with expectations for the European Central Bank to cut interest rates by 50 basis points in December surging.
After the release of the PMI data, the euro fell more than 1% against the dollar to 1.0335 dollars, the lowest level since November 2022. Market bets on the possibility of the European Central Bank cutting interest rates by 50 basis points next month jumped from around 15% yesterday to over 50%. Interest rate traders expect a 150 basis point cut by the end of 2025.
The Vice President of the European Central Bank: The path of interest rate cuts is more important than the magnitude.
Vice President of the European Central Bank Luis de Guindos stated that the European Central Bank is clearly moving towards interest rate cuts, but the magnitude of rate cuts at each monetary policy meeting is not so important.
ECB Vice President said that the monetary policy will continue to be relaxed, and there is no need to pay too much attention to the magnitude of a single interest rate cut.
De Guindos, Vice President of the European Central Bank, stated that the ECB is on the path of reducing interest rates, and the amount of each rate cut is not very important; De Guindos expects that wage growth in the euro area will slow down next year, and the inflation rate will approach the 2% target.