ECB could hike rates this year before ending the asset purchase operations - BBH

In view of the analysts at BBH, one of the factors that helped the euro recover in recent weeks is speculation that the ECB could hike rates this year before ending the asset purchase operations.  

Key Quotes

“The speculation was fanned by comments from some officials and the steady increase in inflation.  At the end of the week, investors will likely learn that the six-month rise in CPI was snapped February.  The year-over-year pace may slow to 1.8% from 2.0% on softer energy prices.  The core rate may have eased to 0.8% (from 0.9%) and remains stuck in the trough after having bottomed at 0.6%.”

“Merkel's CDU did better than expected in the state election of Saarland.  Although it is one of the smallest German states, there were ideas that the  SPD, under new management was going to give the CDU a formidable challenge.   The CDU did a few percentag epoints better than last time.  The status quo under which it leads a coalition with the SPD, will likely continue.  Of note, the  anti-euro and anti-immigration AfD appears to have seen its support slip. .  That said there are two more state elections next month ahead of the natinoal election in late September.”