Daily digest market movers: EUR/USD stays under pressure as ECB officials worry about Eurozone growth
- EUR/USD is expected to remain on the back foot as investors expect Scott Bessent’s selection for the role of Treasury Secretary has set the stage for tariff hikes, a move that would prompt a global trade war. Higher import tariffs by the US will adversely impact the already vulnerable Eurozone economy by dampening its export sector.
- Speaking to Les Echos on Monday, European Central Bank (ECB) Chief Economist Philip Lane said that the risk of a big disruption to the Eurozone is very high if the US government enacts a rapid and universal tariff regime, according to Mace News. Last week, Lane warned that a global trade war due to the likely implementation of President-elect Donald Trump’s higher tariffs would result in a “sizeable” loss in global economic output. "Trade fragmentation entails sizeable output losses,” Lane added.
- When asked about his outlook on interest rates, Lane said: “A lot of the final leg of bringing inflation to target could be covered next year; after that restrictive policy will not be needed.”
- The German IFO Business Sentiment index data came in mixed in November. The data showed that German businesses’ morale deteriorated slightly over the month, although the index gauging expectations came in slightly better than what economists had expected.
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