Intra-Day News and Views EUR/USD

Intra-Day Market Moving News and Views 
02 Dec 2016 01:34GMT

EUR/USD - Euro rallied in New York session on ECB's tapering report n extended overnight gain in New York session to 1.0677 in Asia on Friday.
Reuters reported earlier the ECB will extend its bond purchases beyond March and consider sending a formal signal after its policy meeting next Thursday that the programme will eventually end, senior sources with direct knowledge of discussions said. Even some sceptics of more stimulus on the bank's Governing Council have accepted that an extension beyond the current expiry date of March is inevitable given weak underlying inflation and heightened political risk.

They are still wrestling with the question of how to structure that extension, however, according to multiple senior sources at the European Central Bank and national central banks.
Much of the preparatory staff work has focused on a six-month extension at a steady pace of 80 billion euros per month, an option favoured by many as growth is sluggish, inflation lacks momentum and political risk from key elections keeps the chances of market volatility high.

But some have indicated they would favour an extension at lower volumes, for example nine months at 60 billion euros a month, fearing that a straight extension could make the programme appear open-ended, a compromise under discussion would be to signal the programme's eventual end, possibly in the bank's forward guidance, indicating that the purchases cannot be extended indefinitely.

Another option is not to specify monthly purchase volumes, essentially making them dependent on economic developments, the sources said. That would allow the ECB to buy up to 80 billion euros without requiring it to spend the full amount.

Another source from a country that is not seen to be in the hawk or dove camp said he estimated there was a majority on the council in favour of sending such a signal.