Institution: The selection of the European Central Bank president will impact the euro’s performance

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智通财经2026/11/05 10:08

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ING's Francesco Pesole stated that the Netherlands has officially supported Klaas Knot in his bid for ECB President, after which Knot delivered a speech with a distinctly hawkish stance.
Knot believes that second-round inflation effects may rise, and that the European Central Bank needs to respond to minor shocks driving inflation higher with higher interest rates.
Another frontrunner, Pablo Hernández de Cos, has long been seen as dovish, and the market is awaiting his comments.
The institution believes that if Knot is appointed, given his hawkish stance, it will be a positive event for the euro.
Meanwhile, eurozone inflation in October accelerated from 3.8% as expected to 4.0%, while core inflation remained stable at 2.5%.
The macro team at the institution believes this brings the European Central Bank closer to a rate hike in December.
Due to falling oil prices, the previous day saw the 2-year EUR/USD swap rate spread widen, which is negative for the euro.
A similar dynamic occurred in summer when oil prices dropped to $70, which prevented EUR/USD from rising.
At least one more rate hike, most likely in December, now appears certain, providing greater support for eurozone interest rate expectations.
However, this interest rate factor, combined with lingering French risks, makes the institution less optimistic about a breakout to the upside for EUR/USD.
The institution continues to believe that upside for EUR/USD above 1.1300 is limited, with 1.1300 as its year-end target.
Overall, the ECB president's stance and inflation data jointly affect euro pricing, but French risks are capping gains for the euro.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Institution: The selection of the European Central Bank president will impact the euro’s performance

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