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The latest FT report says that Lagarde is expected to depart from the ECB well before her term as president expires, according to a person familiar with her thinking. It is said that ideally she wants to make an exit before the French presidential election in April next year. In doing so, it will allow outgoing French president Macron and German chancellor Merz to find a suitable replacement to put at the helm of the ECB.But for now, it is still unclear when Lagarde’s departure will happen. Well, this certainly coincides with the speculation last year already that she would leave her post earlier than what her term would dictate. For some context: Lagarde reportedly has discussed cutting short ECB stint to head WEFThe ECB tried to put down the linked report at the time, with Lagarde also coming out to say that “I regret to tell you that you’re not about to see the back of me”. But now, here we are again discussing all of this.The report above adds that French president Macron has for months wanted to at least have a say in deciding on who should be picked to succeed Lagarde as ECB president.As a reminder, Macron cannot run for a third term as French president. Hence, the timing in wanting to get this all wrapped up before the French presidential election in April next year. That especially since far-right leader Marine Le Pen is still in contention to be on the final presidential ballot.Circling back to Lagarde, she had already added fuel to the fire in her early departure last month already. When speaking to Bloomberg, she mentioned that she only accepted the ECB post under the impression that she would just serve a five-year term. So, there’s definitely some mixed messaging there to what she previously hinted in June last year.The full FT report can be found here (may be gated).
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
Lagarde’s potential early exit from the ECB could shake up the Eurozone markets significantly. If she leaves before the French presidential election in April, it might create uncertainty around the ECB’s future direction, especially in terms of interest rates and monetary policy. Traders should keep an eye on how this could affect the euro’s strength against the dollar and other currencies. A leadership change could lead to volatility in forex pairs like EUR/USD, particularly if the market perceives a shift in policy stance. Additionally, if Lagarde’s departure triggers a sell-off in European equities, it could create ripple effects in global markets, impacting commodities and crypto as well. Watch for key support and resistance levels in the euro, as well as any shifts in sentiment leading up to the election. Here’s the thing: while some might see this as a chance for a fresh start, others could view it as a sign of instability. The real story is how traders react to the uncertainty surrounding the ECB’s leadership and its implications for monetary policy. Keep an eye on the euro’s performance in the coming weeks as this situation unfolds.
📮 Takeaway
Monitor the EUR/USD pair closely; Lagarde’s potential exit could lead to increased volatility and shifts in market sentiment ahead of the French elections.
