The EUR/SGD currency pair edged up on Tuesday, reversing a loss from the prior trading session, as traders awaited the Euro Area’s preliminary CPI inflation data for May due out later in the day. The new figures could provide further clues over the European Central Bank’s monetary policy trajectory.
Consensus expectations are for headline CPI to rise 3.2% year-on-year in May, while core CPI is projected to increase 2.4% over the same period.
ECB Executive Board member Isabel Schnabel argued that the central bank should move ahead with an interest rate hike in June, even if US peace talks with Iran are successful.
She highlighted that the conflict had lasted significantly longer than anticipated and that elevated energy prices were increasingly affecting the wider economy.
And, ECB policy maker Francois Villeroy de Galhau again underscored that the central bank “will do what is necessary” to ensure inflation remains in line with its target.
Market pricing indicates that investors have already factored in two increases in the ECB’s 2% deposit facility rate and assign nearly a 50% probability to a third hike over the coming year.
Meanwhile, SGD traders will be paying close attention to Singapore’s Manufacturing PMI data for May.
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