The EURUSD is trading near session lows going into the press conference from ECB's Legarde. The price is at 1.1738. The low price reached 1.1731. The high price for the day was reached in the Asian session near 1.1780.
Initial comments from Lagarde:
- in the first quarter, the economy grew more than expected
- survey data .point to overall modest expansion.
- Higher tariffs in stronger euro are expected to make it harder for firms to invest.
- Strong labor market, rising real incomes, solid private sector balance sheet support consumption.
- Defense and infrastructure investment should bolster growth
- Indicators of underlying inflation suggests inflation will stabilize at target.
- Labor costs have continued to moderate.
- There is slower growth in unit labor costs out by increase productivity and moderate labor costs
- short-term inflation expectations moderated. Longer term inflation expectations continue to stand around 2%.
- Risk to growth remain to the downside led by global trade tensions. Deterioration and financial markets sentiment could lead to greater risk aversion.. Geopolitical tensions could lead to major source of uncertainty.
- If geopolitical and trade tensions were lifted, it could spur economic activity.
- Outlook for inflation is more uncertain than usual .
- ECB is not pre-committing to a particular rate path
The EURUSD is trading near the lows for the day at 1.1731.
The Q&A begins at 9 AM ET
- ECB does not target exchange-rate. We monitor them.
- Exchange-rate matter for our inflation forecasts.
- Our baseline from June is currently holding
- We are in a good place because inflation is at 2%.
- Our projections point to inflation stabilizing at 2% target in the medium-term.
- We have seen growth developing in a relative favorable way.
- 0.6% growth in the first quarter was partly attributed to Ireland, partly was due to frontloading and increase consumption and investment.
- Growth is in line if not better than our baseline.
- We are confident that the inflationary shock is behind us.
- First of all is to wait, as elements will pan out in the next few months.
- We are not going to be moved away from minor deviations from target in 2026.
- You will always find two or three governors very concerned about undershooting inflation.
- Retaliation in tariffs is optional, not definite.
- Disinflationary or inflationary impact of tariffs cannot yet be determined
- There will probably be bottlenecks as a result of tariffs..
The EURUSD bouncing back (trading at 1.1754 currently at 9:15 AM ET). The German 10 year Bund yield is trading near the highs up 9.7 basis points at 2.696%.The EURUSD has moved back into a swing area between 1.1752 to 1.1769. Lagarde is not committing to further interest rate cuts.
- Says that the interest rate decision was unanimous
- Risk assessment was broadly shared
- Widely shared that we have to work with data as it comes in.
- If trade tensions resolved in short order, it would clear some uncertainty
- we are in a good place to hold and watch how risks develop in the next few months
The press conference ends at 9:30 AM ET. The EURUSD trading at US session highs at 1.1771. The low during the press conference reached 1.17297.
