ECB's Lagarde still hawkish on inflation despite slowing data
Lagarde's comments yesterday about staying vigilant on inflation, even with some recent softening, were a bit of a head-scratcher for me. It feels like they're trying to walk a very fine line, almost stubbornly so, between acknowledging a cooldown and not wanting to appear to pivot too early. It makes me wonder if they're overcompensating for past misses, or if they genuinely see underlying pressures that the market isn't fully pricing in yet.
My watchlist is reflecting this ongoing tug-of-war. I'm keeping a close eye on $EURCHF, currently at 0.93611, especially after its little bounce today. If the ECB maintains this hawkish stance longer than expected, and we see further divergence with the SNB, that could get interesting. Conversely, if these comments are just noise and data continues to weaken, the current $EURCAD at 1.607 might offer some short opportunities on any strength. Always a puzzle, isn't it?
I think it's a bit of both. They definitely don't want to declare victory too early and risk a resurgence, especially after being criticized for being behind the curve initially. However, the data is softening, and the market is already pricing in rate cuts, so their rhetoric seems increasingly out of sync.