Expectations ahead of the ECB
The ECB is expected to keep its policy unchanged expecting rates to stay at 0.5% or lower for an “extended period”.
TD: “The ECB can deliver much the same statement as last time, including the forward guidance that rates will be left at present or lower levels for an extended period of time. We remain of the view that this threat to cut will not materialize, at least not over the next few months, as the data is gradually improving”.
Mitsubishi Bank: “When the euro has risen, ECB Governor Draghi often tries to rein it in. I suspect a euro around $1.3300 would be a burden for euro zone countries other than Germany. So he may try to talk down the euro a bit.”
Citigroup says that the ECB could offer dovish surprises for the EUR – a detailed forward guidance (like saying that the period of low rates would last for more than 12 months), the release of the ECB meeting minutes and comments about the recent tightening in the money market conditions and euro’s appreciation.