Today's ECB meeting is expected to be one of the most important in recent years: Mario Draghi has signaled, and is widely expected to announce a blueprint of what the central bank's QE tapering will look like beyond 2017, and while no actual tightening will be implemented - either via rates of asset purchases - the ECB is expected to announce it will cut its €60bn/month bond purchases in roughly half starting in January 2018 and lasting for the next 9-15 months.
Between the amount of bonds they plan to buy per month to the duration of the program and their forward guidance, there are no shortage of ways for Mario Draghi to placate the doves and the hawks. We know that the central bank’s preference is to remove stimulus slowly in a way that emphasizes their accommodative monetary policy stance. They want to taper without giving investors a reason to bring forward the timing of the first rate hike and that won’t be easy.
Note, a hawkish reaction would typically lead to (all things equal and in very basic terms), appreciation of the EUR, downside in equities
and fixed income markets. A dovish reaction would be the converse of these moves.
4 main scenarios for the ECB today. Furthermore, the values stated below refer to what the pace of future purchases would be, not the size of the cut.
Very hawkish: EUR 20bln and a 6-month extension
Hawkish: EUR 20bln and a 9-month extension or EUR 30bln and a 6-month extension
Neutral: EUR 20bln and a 12-month extension or EUR 30bln and a 9-month extension
Dovish: EUR 40bln and a 6-month extension or EUR 30bln and a 12-month extension
Very Dovish: EUR 40bln and a 9-month extension or EUR 40bln and a 12-month extension
How the euro trades will come down to the specifics. If they cut by more, the euro will soar. If they cut by less it will crash. If they cut by 30B and extend out 6 months only, the euro will also rise but if they taper by 30B and extend purchases by 9 months, the performance of the euro will depend on the degree of Draghi’s cautiousness.
check calendar: www.investing.com/economic-calendar/
Deposit Facility Rate
ECB Interest Rate Decision (Oct)
Between the amount of bonds they plan to buy per month to the duration of the program and their forward guidance, there are no shortage of ways for Mario Draghi to placate the doves and the hawks. We know that the central bank’s preference is to remove stimulus slowly in a way that emphasizes their accommodative monetary policy stance. They want to taper without giving investors a reason to bring forward the timing of the first rate hike and that won’t be easy.
Note, a hawkish reaction would typically lead to (all things equal and in very basic terms), appreciation of the EUR, downside in equities
and fixed income markets. A dovish reaction would be the converse of these moves.
4 main scenarios for the ECB today. Furthermore, the values stated below refer to what the pace of future purchases would be, not the size of the cut.
Very hawkish: EUR 20bln and a 6-month extension
Hawkish: EUR 20bln and a 9-month extension or EUR 30bln and a 6-month extension
Neutral: EUR 20bln and a 12-month extension or EUR 30bln and a 9-month extension
Dovish: EUR 40bln and a 6-month extension or EUR 30bln and a 12-month extension
Very Dovish: EUR 40bln and a 9-month extension or EUR 40bln and a 12-month extension
How the euro trades will come down to the specifics. If they cut by more, the euro will soar. If they cut by less it will crash. If they cut by 30B and extend out 6 months only, the euro will also rise but if they taper by 30B and extend purchases by 9 months, the performance of the euro will depend on the degree of Draghi’s cautiousness.
check calendar: www.investing.com/economic-calendar/
Deposit Facility Rate
ECB Interest Rate Decision (Oct)
评论:
The ECB is widely expected to stand pat on interest rates when it announces its monetary policy decision at 7:45AM ET (1145GMT).
评论:
QE EUR 30bln from Jan 2018 and extended to Sept 2018
EUR down =))
EUR down =))
评论:
评论:
good bye EU
