The bottom line was that there was a slight tweak. The asset purchases under the APP and the PEPP programme are both to carry on. The APP purchase will continue at €20 bln a month. However, the Governing Council decided that the pace of asset purchases under the PEPP programme could be slightly reduced. The PEPP purchases are now to be conducted at a ‘moderately lower pace’ versus the previous decision of a ‘significantly higher pace’.

ECB’s view on the economy

The risks remain broadly balanced and the euro area economic rebound is seen as broadly advanced. Output is expected to exceed pre-pandemic levels by the end of 2021 and current inflation is still seen as temporary. Inflation targets are still seen as below target for the medium term. So, remember that the ECB is not wanting to move on interest rates without being convinced that inflation is rising in a meaningful and significant way that can only be managed by central bank action. This is to differentiate between the supply side constraints from COVID-19 and related price surges.

What does this mean?

In the press conference, it was clarified that the tweak to the PEPP purchases is not considered ‘tapering’. This reflects that the ECB are wanting to simply avoid overkill with too much APP purchases and not signal a material shift in policy outlook. Further PEPP discussion will take place in December. There was little new here at the meeting and the ECB is remaining on a ‘wait and see’ stance. Moving forward the focus remains on incoming data and the December meeting. There was nothing obviously tradable from the latest ECB decision as the ECB stuck to market expectations.

EURUSD


Learn more about HYCM

High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD holds above 1.1700 but the upside is limited

The EUR/USD pair flirted with 1.1750 but was unable to retain its modest intraday gains. Now trading in the 1.1720 price zone, bears retain control ahead of the US central bank monetary policy decision.

EUR/USD News

GBP/USD: Pressure mounts ahead of central banks’ announcements

The Fed and the BoE will make announcements this week. UK public inflation expectations are up for this year and the upcoming ones. GBP/USD is technically bearish in the near term, poised to retest August monthly low.

GBP/USD News

Gold: Further advances depend on the Fed

A better market mood put pressure on the American currency. The US Federal Reserve will announce its monetary policy decision on Wednesday. Gold advanced for a second day in a row, but additional gains are in doubt.

Gold News

Shiba Inu bulls can't hold SHIB from dropping to $0.000006

Shiba Inu price has fallen -28% over the past four trading sessions. Bears remain in control as bulls fail to complete a breakout above $0.000008. Bulls must hold $0.000007 to prevent a drop towards $0.000006.

Read more

Fed Preview: Three ways in which Powell could down the dollar, and none is the dot-plot

No taper now, but when? That is the main question for the Fed in its all-important September meeting. The bank buys $120B worth of bonds every month and it is set to reduce the pace at some point – the first step toward raising interest rates. 

Read more

Majors

Cryptocurrencies

Signatures