Well done ECB, but less will be needed! - SocGen

Sandeep Kanihama FXStreet Contributor

Anatoli Annenkov, Research Analyst at Societe Generale, suggests that albeit with an earlier announcement, the first reduction in the ECB’s Asset Purchase Programme (APP) will take place in April 2017, as SocGen’s expected.

Key Quotes

“The programme is now intended to run until December 2017, but this forward guidance is “state-contingent” meaning that focus will need to be firmly on the data over the coming year. We expect a gradual tapering of €10bn to continue as of June 2017, with reductions of €10bn per meeting, assuming our forecasts hold steady, but also in view of the legal problems of raising the issue limit.”

“The market reaction has been favourable, which should reassure the ECB going forward. Key variables to watch going forward will be the bond yield levels and spreads in the periphery, as reduced QE may increase vulnerability (especially for Portugal). We still believe the ECB has a powerful weapon in the TLTRO, which we think will be extended in March 2017 for a year. If the growth outlook weakens due to slowing consumer confidence, allowing TLTRO 3 to be used for mortgage lending could be an effective cyclical measure for the ECB.”

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 off highs, back to around 1.1900

EUR/USD keeps its strong bid bias in place despite recedeing to the 1.1900 zone following earlier peaks north of 1.1900 the figure on Monday. The US Dollar remains under pressure, as traders stay on the sidelines ahead of Wednesday’s key January jobs report, leaving the pair room to extend its upward trend for now.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold picks up pace, retargets $5,100

Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.

Crypto Today: Bitcoin steadies around $70,000, Ethereum and XRP remain under pressure

Bitcoin hovers around $70,000, up near 15% from last week's low of $60,000 despite low retail demand. Ethereum delicately holds $2,000 support as weak technicals weigh amid declining futures Open Interest. XRP seeks support above $1.40 after facing rejection at $1.54 during the previous week's sharp rebound.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.