Daily digest market movers: EUR/USD trades sideways amid EU election uncertainty
- Investors look for fresh cues about the French election outcome. Polls show that Marine Le Pen's far-right National Rally has presented a strong claim for parliamentary elections but it is slightly short of having an absolute majority. Meanwhile, French Finance Minister Bruno Le Maire said that if RN gains power and goes ahead with its program, “a debt crisis is possible in France," Reuters reported.
- On the monetary policy front, European Central Bank’s (ECB) policymakers have refused to commit to any specific rate-cut trajectory. Conversely, ECB officials have cautioned about inflation remaining persistent due to stubborn price growth in the services sector, which is mainly driven by wage growth.
- This week, ECB President Christine Lagarde said in an interview that last week’s rate-cut move doesn’t commit any linear declining path. "There might be periods where we hold rates again,” she added, according to Reuters.
- In Thursday’s session, the major currency pair will be guided by the US Producer Price Index (PPI) data for May, which will be published at 12:30 GMT. Annual headline PPI is estimated to have accelerated to 2.5% from 2.2% in April, with core reading growing steadily by 2.4%. Stubborn PPI data would diminish market expectations for Fed rate cuts in the September meeting, while soft figures will boost them.
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