Currency Analyst since 2010

ECB: hints ahead of the meeting

Danske Bank: “In our view, there are fewer arguments for a rate cut today than a month ago, given recent upside surprises in economic indicators and a slower pace of decline in excess liquidity. Hence, we expect the ECB to keep rates unchanged and Draghi to refrain from explaining further the forward guidance. EUR/USD has lost momentum recently. While partly due to taper-supportive US data and partly geopolitical concerns, positioning ahead of ECB has probably been a factor. If Draghi does deliver dovish comments the cross will continue its decline.”

TD Securities: “There are obviously many members of the ECB Governing Council who want to convince the market that rate hikes are years away... The problem is that Draghi tried to deliver that message in August and markets ignored him as there is no suggestion the ECB is ready to act to defend its guidance… So we expect to see markets interpret today’s ECB message as hawkish or at least not dovish enough.”

Credit Agricole: “EUR direction will be determined the tone of the press conference. Modest upward revisions to staff growth forecasts will bode well for the EUR. Additionally in the wake of recent better data it is possible that the ECB shifts the balance of risks upwards to “broadly balanced” which could also help to stem the EUR’s recent decline. However, the ECB is unlikely to want to give markets the impression that it is turning more hawkish, with “forward guidance” set to be repeated.”  



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