ECB meeting to be the focal point for markets this week - ING

In view of analysts at ING, the ECB meeting will be the focal point for markets this week as ECB officials have been playing ‘good cop, bad cop’ for EUR bulls – with Governing Council member, Villeroy citing FX moves as a source of uncertainty, while Weidmann noted that expectations for a mid-2019 ECB deposit rate hike are realistic.

Key Quotes

“While the latter holds the key to further EUR upside, Villeroy’s cautious take is probably the consensus within the ECB for now. Sure, our economists see it as too early to be committing to an explicit end to QE purchases, though we don't feel the EUR needs to necessarily sell-off on this; it would presume that investors have been positioning for an ECB policy shift as early as this week – and we don't feel that this has been the case.”

“Ahead of this, we have German ZEW and EZ confidence data (Tue), PMI releases (Wed) and German IFO survey data (Thu). Worth also noting that the EUR saw off the German political event risk over the weekend; the SPD narrowly voted to begin coalition talks with Chancellor Merkel - which may be seen as a small step towards a resolution.”