ECB: Another easing package coming – TD Securities

Sandeep Kanihama FXStreet Contributor

According to TD Securities analysts, today all eyes will be on the ECB decision, where another easing package is widely expected.

Key Quotes

“Our base case sees a 20bps rate cut (mkts -10bps) with tiering, €40bn/month of QE (mkt ~€30bn), and no rate hikes until at least mid-2021. We're more comfortable with our rates view than QE, as even the hawks seemed to be open to cutting rates further, while the QE decision is likely going to be much more contentious.”

“Looking at the risks around our base case, we see a much higher probability of seeing a more hawkish outcome than a guns-blazing dovish package. While we attribute about a 40% probability to our base case, we see fairly high 30% odds of an outcome roughly in line with consensus, and an uncomfortably high 20% chance that the ECB disappoints with no QE announced at all, and a message that Draghi has been steamrolled by the hawks.”

“We hope though that the deteriorating staff GDP and HICP forecasts will be enough to convince the hawks that more QE is needed, allowing Draghi to cement his status as the President who did "whatever it takes" to save the Eurozone.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.