ECB Preview: Downbeat macro outlook to reinforce the bearish bias – TDS

Economists at TD Securities think that the ECB has likely done enough, for now. The focus for the press conference will be on what the ECB has left in its toolkit and how likely it is to use those tools.

Key quotes

“The ECB has probably done enough for now, with no expectation for any further substantial policy announcements at next week's meeting, but markets will want more guidance around what to expect going forward, and what's left in the ECB's toolkit.” 

“We expect the downbeat macro outlook and negative balance of risks to reinforce our bearish bias on the EUR. Within this, we see the added risk to EUR that could arise if a sense emerges that the ECB is out of ammunition or is unable (or unwilling) to adapt existing tools to confront the current crisis.”

“EUR/USD has started to move lower ahead of next week’s decision. We are closely monitoring this week’s closing level and see potential for a further grind lower is spot closes trading below 1.0769 tonight.”