Nomura FX Strategy Research doesn’t expect the ECB to announce any major changes to its policy parameters at the next Governing Council meeting on 20 July.
“We are, however, expecting the easing bias on the asset purchase programme (APP) to be dropped via the removal of the phrase concerning the Bank’s readiness to increase its size and/or duration from the forward guidance. That, in turn, should pave the way for a more formal announcement about the tapering of the APP at the following meeting on 7 September,” Nomura adds.
On the EUR front, Nomura sees a risk of a slowdown in EUR appreciation and argues that the single currency may have an asymmetric reaction to the outcome of the ECB meeting.
“Even though we expect the ECB to change its forward guidance further, the change would not be a big positive surprise for the market. In contrast, no change in the forward guidance or negative comments on the recent market re-pricing from President Draghi could weaken EUR quickly,” Nomura argues.
Source: Nomura Securities Research
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