As fully expected, the ECB cut rates by 25bps today, TDS’ economists note.  

Fragmentation risks in euro area grow

“The tone of the decision was marginally dovish, with Lagarde refusing to rule out that a 50bps cut was debated, and pointing to emerging downside risks to inflation. This leaves sequential 25bps cuts firmly on the table going forward.”

“The ECB came as a non-event for markets. We continue to favour range trading with tactical shorts in EUR vs. GBP.”

“The ECB came with no big surprises and markets reacted much more to the stronger US data. We hold our short EUR/USD position given fragmentation risks in euro area, lack of engines of growth and rising risks of a Trump Presidency.”