FXStreet (Delhi) – Analysts at BBH, note that the US dollar is trading mixed against the majors, ahead of the all-important ECB decision with likelihood of increase in asset purchases program of the bank.
Key Quotes
“Updated staff forecasts will likely point to slower growth and less price pressures than had been expected in the June forecasts.”
“However, even with mild downgrades in the staff forecasts, it is unreasonable to expect the ECB to respond this week by increasing the quantity of assets being purchased, or extending the current program beyond September 2016.”
“As we have noted before, every central bank that has tried purchased assets to expand its balance sheet, to compliment near-zero interest rates or even negative deposit rates, has chosen to do more than one round. ECB may break this pattern, but it is not yet a certainty.”
“ECB President Draghi is likely to emphasize the flexible nature of its asset purchases. Also, financial conditions have become somewhat less accommodative since the last ECB meeting. Draghi may push back against this verbally at his press conference, which suggests downside risks to the euro today.”
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