EUR/USD: As always with the ECB, risks skewed towards disappointment – BBH

EUR/USD is currently trading just above 1.00 ahead of the European Central Bank (ECB) which is expected to hike rates by 75 bps. However, economists at BBH believe that the ECB could disappoint markets, weighing on the shared currency.

It is dangerous to go into ECB decision long euros

“We think it's dangerous to go into today's ECB decision long euros as we feel the risks are skewed (as always with the ECB) towards disappointment. We'll know more shortly.” 

“WIRP suggests nearly 75% odds of a 75 bps hike but with the hawks in control, the ECB will very likely take the plunge. Higher than expected August CPI readings certainly make the case for more aggressive tightening and it seems more and more on the Governing Council are leaning towards this outcome.  While the energy crisis adds another wrinkle to the process, we think it is too early yet for it to impact ECB policy right now.”