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2026-11-05 17:50:26
[Institutions: ECB President Selection Affects Euro Movement] ⑴ Francesco Pesole of ING stated that the Netherlands has officially supported Klaas Knot's candidacy for ECB president. Knot subsequently gave a speech with a clearly hawkish stance. ⑵ Knot believes that the effects of a second round of inflation may rise, and the ECB needs to respond to small shocks pushing up inflation with higher interest rates. ⑶ Another leading candidate, Pablo Hernández de Cos, has long been considered a dove, and the market awaits his statements. ⑷ The institution believes that if Knot is appointed, given his hawkish stance, it will be a positive event for the euro. ⑸ Meanwhile, Eurozone inflation accelerated to 4.0% in October as expected from 3.8%, while core inflation remained stable at 2.5%. ⑹ The institution's macro team believes this brings the ECB closer to a December rate hike. ⑺ Affected by falling oil prices, the 2-year euro-dollar swap rate spread widened the previous day, which is unfavorable for the euro. (8) A similar dynamic occurred when oil prices fell to $70 in the summer, preventing the euro from rising against the dollar. (9) At least one more rate hike, most likely in December, seems a foregone conclusion, providing stronger support for eurozone interest rate expectations. (10) However, this interest rate factor, coupled with lingering French risks, makes the institution less optimistic about an upward breakout for the euro against the dollar. (11) The institution continues to believe that the euro's upside potential above 1.1300 is limited, with 1.1300 being its year-end target. (12) Overall, the stance of the ECB president and inflation data jointly influence euro pricing, but French risks limit the euro's rise.
