[INSIGHTS] EUR: Trading The ECB – Views From Major Banks

Posted on 27 April 2017 Updated on 27 April 2017

The following are brief expectations for the ECB April meeting statement as compiled from the related research reports of 7 major banks. Overall, they see the ECB on hold with a neutral to a slightly dovish message and sees EUR a buy on dips.
Nomura Research: Nomura expects all the ECB’s key policy parameters to be left unchanged. Nomura thinks the initial EUR reaction to the ECB announcement is likely to be muted again but argues that dips should be a good buy.
SEB Research: SEB expects the ECB to avoid sending a hawkish message and hence considers downside risks to bond and equity markets as limited. On the EUR front, SEB expects a muted reaction projecting a correction lower limited to 1.0850.
BofAML Research: expects the ECB Governing Council to leave the current stance and communication largely unchanged. BofAMl doesn’t see direct FX implications from the ECB meeting this week, but argues that the stage is set to start buying EUR/JPY again. “In this context, we would look to take advantage of any EUR dip if the ECB sounds too dovish this week to buy EUR/JPY.
UniCredit Research: Thursday’s ECB meeting will probably be fairly uneventful: despite solid growth data, we do not expect new policy announcements, nor do we anticipate any material change of rhetoric.
ING Research: it will be difficult for Draghi to materially change growing bullish EUR trend. With speculative EUR/USD positioning largely neutral and material EUR/USD undervaluation in place, the trend seems to be upwards with EUR/USD dips likely to be shallow from here.
LLoyds Research: We expect the ECB to leave its policy rates unchanged and to make no new announcements on its asset purchase programme. It has already announced a reduction in monthly purchases to €60bn from this month.
Danske Research: Danske expects a slightly dovish tone from Mario Draghi at this week’s ECB meeting, noticing that the main message should be that the ECB is on autopilot with its current monetary policy.

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