investingLive European FX news wrap: ECB’s Schnabel is fine with rate hike bets

• RBA preview: Will the central bank switch to a hawkish stance?
• ECB’s Kazimir: I see no reason to change rates in the coming months
• Nifty 50 ends the day lower but rebounds from key support ahead of the close
• Eurozone December Sentix investor confidence -6.2 vs -7.0 expected
• ECB’s Rehn: Sticking to full optionality on rates, full freedom of action
• Market Outlook for the week of 8th – 12th December
• Switzerland November SECO consumer confidence -34 vs -34 expected
• Germany October industrial production +1.8% vs +0.4% m/m expected
• ECB’s Schnabel: Comfortable with bets that next move will be a rate hike
• FX option expiries for 8 December 10am New York cut
• Japanese Finance Minister Katayama: Recently seeing one-side, rapid moves
• What are the main events for today?

It’s been a pretty boring session in terms of data releases and newsflow. The main highlight was a Bloomberg article on ECB’s Schnabel recent remarks in which she said that she was fine with rate hike bets in 2026.

The interview in question was from last week and Schnabel is a known hawk, so it’s not exactly some fresh stuff. Nonetheless, we’ve been seeing the ECB and some other central banks focusing more on upside inflation risks recently. The main 2026 risk for markets could very well be hawkish central banks.

In the markets, the EUR spiked on Schnabel’s remark but gave up the gains pretty quickly. We are now very close to the last FOMC decision of the year, and I wouldn’t be surprised to see some defensive hedging into it given the hawkish risks.

In FX, we haven’t seen notable changes but the CAD remains the strongest currency following the incredibly strong Canadian employment report on Friday. Notably, the JPY continues to weaken despite the incoming BoJ rate hike. The Japanese officials clearly don’t like this price action with the Finance Minister Katayama today lamenting again about “one-sided, rapid moves”.

The positive risk sentiment continues to hold with US equities trading higher in pre-market and bitcoin adding to yesterday’s gains. In the bond market, things are quite different. US yields continue to grind higher and getting closer to the upper bound of the 3-month range. The latest upside might have been in response to the Canadian data as the market might fear the overeasing risk.

This article was written by Giuseppe Dellamotta at investinglive.com.