BNY’s Bob Savage points out that the Euro is holding above 1.1700 even as the US Dollar (USD) firms, with markets weighing divergent European Central Bank (ECB) rhetoric. François Villeroy de Galhau argues for waiting for more data, while Peter Kažimír signals near-certainty of a June rate hike. Eurozone sentiment and Purchasing Managers' Index (PMI) data show improving activity but persistent inflation and cost pressures.

ECB debate and mixed Eurozone data

"The Eurozone Sentix Economic Sentiment Index for May climbed 2.7 points to -16.4, reflecting cautious investor optimism despite ongoing inflation concerns and the Iran conflict."

"The Eurozone manufacturing PMI for April rose to 52.2 points (March: 51.6), setting a 47-month high and indicating stronger manufacturing growth."

"The fear factors of energy prices and supply shocks continue to leave open debates about policy – compare the push by the ECB’s François Villeroy de Galhau to wait for more data against his colleague Peter Kažimír’s near-certainty on a June rate hike."

"The ECB annual report and conference today will add to bond selling, as a June hike remains the consensus view."

"USD is higher despite EUR holding above 1.1700 on the index because of JPY and local holidays."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)