Euro Falls, Bonds Gain as Traders Pin Hopes on Early ECB Cut
- Money markets are fully pricing a quarter-point cut in April
- ECB’s Villeroy said ECB could lower rates any time this year
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European government bonds rallied while the euro extended its biggest monthly loss since September amid growing speculation the European Central Bank will cut interest rates sooner rather than later.
ECB official Francois Villeroy de Galhau signaled over the weekend that policy makers could lower borrowing costs at any moment this year and all options are open at upcoming meetings. The market responded by firming wagers on a quarter-point decrease as early as April, which is now fully priced. Just before last week’s monetary policy meeting, the odds of that were 60%.