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ECB cheat sheet: Half a gear down
Another well-telegraphed hike from the European Central Bank brings another tough challenge for the Governing Council and Christine Lagarde: committing to another move in September or switching to full data dependency. We think the second scenario looks more likely, which may be read as a modestly dovish surprise and could weigh on EUR/USD. Stressing the "higher for longer" to counter market rate cut speculation A 25bp hike is a done deal. More relevant is what the European Central Bank will signal as its next steps. Given the surprisingly dovish remarks by some of its most hawkish members, a renewed commitment ... (full story)