The money markets priced two full ECB rate | 15 November 2021

15 November 2021, EUR/USD

EURUSD trading plan:

The money markets priced two full European Central Bank rate hikes by the end of next year. The bloc’s bond markets have swung in recent weeks, with a focus on when major central banks will start to hike rates as markets fear inflation is proving less transitory than initially expected. After moving back to price in a full ECB hike by September 2022, Eonia futures dated to the bank’s December 2022 meeting priced two full rate hikes by then, compared to one hike earlier this week. Normally, money market rate hike bets and short-dated bond yields would be expected to move in the same direction as the latter are sensitive to policy rates. This is a positive signal for the European currency.

Investment idea: buy 1.1435 and take profit 1.1485.

David Johnson
Analyst of «FreshForex» company
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