The European Central Bank Governing Council will be dovish today, and may even cut the main rate.
- 1145 GMT for the announcement
- 1230 GMT is President Draghi’s press conference
- Most expect the depo rate to remain on hold at -0.4%, although the probability of a cut (to 0.5%) is priced around 38% … which is not negligible …. this meeting is ‘live’.
Here’s a quick preview from TD:
- The odds of a dovishly more proactive ECB look twice as high as those of a hawkish disappointment
- The press conference is key to the ECB’s view on the rate floor, potential QE, low inflation expectations, and reinforcing a “symmetric” inflation target
And, on the euro:
- With our base case fully priced and EUR weak, we see some scope upside if Draghi delivers as expected.
- Dovish risks prevail, which could send EURUSD lower into fresh ranges.
- Next week’s FOMC may constrain follow-through.
