EUR: Some resistance to QE extension - MUFG

Derek Halpenny, European Head of GMR at MUFG, notes that the EUR/USD rate continues to trade in a painfully narrow trading range with the ECB’s monetary policy stance not having any traction in weakening the currency further.

Key Quotes

“Yesterday, Slovenia’s Governing Council member, Bostjan Jazbec stated he saw no need for QE to be extended and that he would be surprised if that strategy was to change by the time of the December meeting.

ECB Governing Council member Jens Weidmann also warned against an extended use of easy monetary policies which he believes could curb productivity and hinder banks’ ability to lend. He also voiced opposition to changing the ECB capital key system for buying sovereign debt. We still  expect QE to be extended in December in part simply for logistical reasons – the ECB surely does not intend to go from buying EUR 80bn of assets in March to zero in April.”