Euro: The ECB meeting is on Thursday … previews and positioning from Citi and Morgan Stanley via ForexLive

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I posted earlier on BNP Paribas': “What would ECB disappointment look like?”

More now … initially from a Morgan Stanley note to clients:

  • “We think that the market may have moved too far in pricing in further ECB accommodation this early, while valuations are becoming increasingly demanding”
  • Say its too early to expect ECB action this week, the ECB will not launch outright QE
  • The risk/reward is “unfavourable” … the market is pricing a “relatively high probability” of there being QE

From CitiFX Strategy (bolding mine):

  • They say an important consideration is “Whether the ECB is willing to wait for potential EU growth measures first”

Go on to say:

  • “We believe that recent indications do suggest that the ECB would be considering adding QE before long. Not so long ago, President Draghi has argued that a drop in long-term inflation expectations was a prerequisite for QE”
  • “We expect the President to reiterate his message from Jackson Hole about the need for fiscal stimulus. Given German opposition to fiscal stimulus, however, we strongly doubt that Draghi would make future ECB policy contingent on government actions.
  • The overall tone of the press conference could, once again, be rather dovish and that should keep the pressure on the euro.”

I'll stay on the lookout for thoughts from the various institutional analysts ahead of the ECB meeting Thursday and post them as they come along.

posted via ForexLive

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Posted In: FuturesForexGlobalEconomics
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