MORE ECB'S LAGARDE: ECB WAGE TRACKER SUGGESTS SETTLEMENTS OF 2.5-2.8% IN REMAINDER OF 2026, FOLLOWED BY 2.6% IN THE FIRST THREE QUARTERS OF 2027

The ECB's wage tracker, as cited by President Christine Lagarde, points to negotiated wage settlements of 2.5-2.8% for the remainder of 2026, easing to 2.6% across the first three quarters of 2027. For euro area monetary policy, wage growth at these levels is a key input to services inflation, so a stable and moderate path supports the view that domestic cost pressures are contained and do not require a more hawkish repricing of the policy rate path. The transmission runs through the rate differential and inflation expectations: firmer wage settlements would tend to lift the euro by strengthening the case for sustained ECB restraint, while a benign profile reduces the premium on EUR-supporting rate expectations. Euro-denominated equities such as the DAX and CAC 40 are sensitive to the same channel, since lower expected discount rates support valuations while exporters' earnings are affected by any currency move. Traders should watch the next euro area flash HICP release and the ECB's upcoming staff projections, which will show whether services inflation is tracking the wage-driven path implied by these settlements.

The Euro (EUR) is the currency of 20 European Union member states. Major EUR movers include ECB Governing Council decisions, Eurozone CPI prints, Bund/BTP spread events, and political risk from France, Germany and Italy.

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