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“Reflecting the global trend toward more cautious central bank hikes, we revise down our expectations for ECB rate hikes, with a single 15bps hike to the depo rate in December,” note TD Securities analysts.

Key quotes

“We expect the ECB to then hike at a cautious pace, with 25bps hikes occurring every six months thereafter. We do not expect the ECB to introduce TLTROs should macroeconomic data recover as we expect.”

“Rates: Given the change in our ECB rate forecast, we revise our Bund forecast for 2019. We now look for 10y Bunds to end 2019 at 55bp compared to the previously envisaged 70bp.”

“FX: We are revising lower our EURUSD forecasts on the back of our downgraded ECB expectations. We retain a broadly constructive outlook for the pair, but we have reduced our year-end expectation to 1.24 from 1.27. Near-term risks to our view are still skewed to the downside, but we could see upside risks emerge on longer horizons.”