EUR traded flat against most of its major rivals in the European session on Thursday as investors waited for the announcement of the policy update by the Europen Central Bank later in the day.
The single European currency rose versus JPY and CHF, fell versus SEK, and changed little versus USD, GBP, CAD and AUD.
The ECB will announce its latest decisions on monetary policy at 12:15 GMT. Expectations are for the central bank to deliver a 25-basis-point decrease to its deposit rate and a 60-basis-point cut to its main refinancing rate, narrowing the spread between the two rates to 15 basis points.
Markets also eagerly anticipate the ECB’s updated macro projections, which will be released along with the policy statements. They will pay particular attention to the central bank’s inflation forecasts, significant revisions of which could prompt a recalibration of the bets on the ECB’s further interest rate moves.
According to Reuters, markets are pricing in 64 basis points of rate reductions in the ECB’s deposit rate by the end of the year. This implies that investors are certain that the bank will cut its rates by 25 basis points twice by the end of 2024 and are seeing a nearly 30-percent probability of a third similar decrease.