ECB will not even tolerate a moderate EUR recovery – Commerzbank

By FXStreet FXStreet (Córdoba) – Next week, the financial markets will be mainly focusing on the ECB decision on Thursday. According to Ulrich Leuchtmann, analyst at Commerzbank, for the FX market it is of key importance whether Europe’s central bankers can keep alive the expectation that further monetary policy measures are possible.

Key Quotes

“Should the ECB only gradually make their instruments more expansionary on Thursday, as we expect, it might be assumed that the effect on EUR exchange rates would only be moderate. That doesn’t have to be the case though. Of course, a higher QE volume, of 10 to 15 billion euros, and a lower deposit rate of 10 or 20 basis points do not justify much lower EUR exchange rates per se, especially as such a step would be close to market expectations and is probably already priced in at current EUR levels“.

“Even so, the ECB could manage to produce such a surprise that the euro does still suffer, for example if it conveys the message convincingly enough that it is not nearly at the end of its measures but can actively respond in future with further monetary policy measures if the situation so requires”.

“This aspect is especially relevant …read more

Source:: FX Street