ECB: No new policy signals coming this week – Danske Bank
|According to the research team at Danske Bank, this week’s ECB meeting is not expected to bring new policy signals to the table.
Key Quotes
“Since the last governing council (GC) meeting, data releases have been on the mark or surprised to the downside.”
“Despite little new information on wages, the ECB’s wage assessment will be very interesting due to Draghi’s relatively hawkish comment at the EP hearing.”
“External (trade war, Brexit) and political (Italy) headwinds are still lingering in the background and the ECB acknowledged that downside risks to growth due to the threat of protectionism, vulnerabilities in emerging markets and financial market volatility have become increasingly prominent. We expect a similar assessment at the press conference, but wouldn’t be surprised if risks have moved to the downside.”
“Draghi will doubtless receive a number of questions on Italy; however, as this recent turmoil is a battle between Italy vs Brussels and Italy vs the market, the ECB will only voice its awareness of the situation and refer to the already established procedures should the ECB be involved. Therefore, we expect the ECB will stay side-lined for now.”
“On the asset purchase programme (APP), we expect, the word ‘anticipate’ to remain, i.e. no formal end to the APP. Should it be changed (meaning an official end to APP), it could lead to a knee-jerk market reaction.”
“We do not expect discussions on the capital key update but will scrutinise any hints on this. This is of significant importance for the reinvestment strategy. We expect this to be announced at the December meeting.”
“We do not expect October’s ECB meeting to be a market mover for EUR/USD. Significant policy changes are still too far on the horizon to grab the FX market’s attention.”
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