Both a paring of ECB easing bets and a build up of Fed rate cut wagers have taken the OIS ECB-Fed spread to shrink to 100bps by June of next year. This means the dollar would lose about 50bps of rate advantage to the euro by next summer
As of today, swaps price in 100bps of easing from the Fed by end of the year, the euro equivalent pencils 40bps less rate cuts. The differential extended on Friday session, when Powell delivered remarks
EUR/USD is currently trading shy of 1.12, that’s about 4bf rally from the beginning of the month. Ahead, we will receive EU flash CPI and U.S. Core PCE
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