Isabel Schnabel’s remarks on upside growth risks—spanning consumption, investment, and government spending—boosted the Euro (EUR) in early trade. With markets now pricing the next ECB move as a hike, EUR/USD holds a 1.1630-1.1680 range with scope for 1.1700-1.1730 before the Fed meeting, ING's FX analyst Chris Turner notes.

EUR/USD targets 1.17 as hedging costs narrow

"Whisper it, but we have a key ECB official suggesting that eurozone growth risks could be to the upside. The ECB's Isabel Schnabel made these remarks in an interview released this morning, citing that upside surprises could come from three directions: household consumption, private sector investment and government outlays on infrastructure and defense."

"These remarks probably need to be seen in the context of her hawkish background and perhaps as a foil to those at the ECB still favoring one last rate cut. But Schnabel has suggested the ECB could revise up its growth forecasts in its next forecast round on 18 December and has said she's comfortable with markets pricing the next ECB move as a rate hike."

"These comments have helped the euro this morning and stand to narrow US hedging costs for eurozone investors further still. 1.1630-1.1680 is the short-term range, with an outside risk of a push to the 1.1700/1730 before Wednesday's Fed event risk."