Eurozone policy now has an extremely accommodative path - Westpac

Sandeep Kanihama FXStreet Contributor

Unless there is a surge of inflation or a slump in activity, Eurozone policy now has an extremely accommodative path after last ECB meeting, suggests Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Although APP was reduced, EUR30bn per month will continue to be purchased until “at least end Sep. 2018”. Short rates are effectively anchored by NIRP and curve steepening limited by the continued APP. EUR is therefore likely to be much more range bound even if recent strength in activity persists in 2018.”

“German coalition discussions are likely to be protracted and so policy clarity is unlikely before 2018. Although the Spanish political debacle appears to have been contained, markets may now concentrate on the potential of early Italian elections being called.”

“Persistent Eurozone strength has been broadly priced in and so the stance of ECB is likely to suggest that EUR/USD and EUR/CHF have defined their range parameters into year end. US factors are the key variables to impact EUR/USD.”

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.

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