ING’s Chris Turner highlights strong foreign demand for Eurozone assets, with EUR280bn of equities and debt bought in the first two months of the year, which may be marginally supportive for the Euro (EUR). He notes that markets largely rule out an April European Central Bank (ECB) hike but price a June move, which ING also expects. Turner adds that EUR/USD trades in a tight range but could rise if Kevin Warsh sounds dovish.

Foreign demand and ECB expectations

"Last week's Balance of Payments figures released by the ECB showed continued strong foreign buying of eurozone asset markets in February."

"So while US TIC data does not show any outright sales of US long-term assets, the strong demand for eurozone assets suggests that, at the margin, the euro could be benefiting from new funds being put to work."

"The market now sees very little chance of an ECB hike later this month but a 68% chance of a hike in June."

"We expect the ECB to deliver a June hike to impress its inflation-fighting credibility on markets."

"EUR/USD is trading in a tight 1.1750-1.1800 range, but could move to 1.1850 if Kevin Warsh says something dovish."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)