ING’s Chris Turner reports that foreign investors purchased EUR280 billion worth of Eurozone equities and debt in the first two months of 2024, indicating robust demand for Eurozone assets and providing marginal support for the Euro (EUR) [1]. The latest Balance of Payments figures from the ECB confirm continued strong foreign buying in February, reinforcing this trend [1]. While US Treasury International Capital (TIC) data does not show outright sales of US long-term assets, the strong demand for Eurozone assets suggests that the Euro is benefiting from new funds being allocated to the region [1].
Market participants currently see little chance of an ECB rate hike in April, but a 68% probability of a hike in June, which ING also expects [1]. Turner notes that the ECB is likely to deliver a June hike to reinforce its inflation-fighting credibility with markets [1].
EUR/USD is trading within a tight range of 1.1750-1.1800, but Turner suggests the pair could rise to 1.1850 if Kevin Warsh, a notable figure, makes dovish remarks [1].
No specific market reactions or analyst opinions beyond ING’s expectations and the potential impact of dovish commentary from Kevin Warsh are discussed in the article [1].
CONCLUSION
Strong foreign inflows into Eurozone assets are providing marginal support for the Euro, with markets anticipating a potential ECB rate hike in June. ING expects the ECB to act to reinforce its inflation-fighting stance, and EUR/USD could see upside if dovish signals emerge. The market impact is medium, with sentiment leaning positive due to robust asset demand and rate hike expectations.