The World Economic Forum in Davos kicks off Monday. Economists at ING analyze EUR/USD outlook ahead of ECB President Christine Lagarde’s remarks.
Lagarde may sound more hawkish in Davos
While ECB hawks’ protests against dovish expectations have had little impact on markets, this week’s WEF event in Davos – which sees many ECB speakers, including President Christine Lagarde – should not be overlooked.
Lagarde has a greater potential to influence markets given a clearly divided Governing Council, and we suspect that she will opt for a more hawkish tone compared to last week’s comments.
There may be some help for the Euro coming from Davos, although we should be wary. Fed expectations have been resistant to data and the same could hold true for the ECB as well. The minutes from the December policy meeting are also released this week.
We still think it is premature for EUR/USD to trade sustainably above 1.10.
