ECB tapering clarity is keenly awaited - Westpac

ECB tapering clarity is keenly awaited, but Draghi has hinted that agreement on technicalities may not be completed by the 26 Oct meeting, notes Tim Riddell, Research Analyst at Westpac.

Key Quotes

“After ECB staffers edged their 2018-19 inflation projections lower due to EUR’s gains since May, survey data will be more closely watched for any impact from this rise in EUR.”

“Germany’s general election is likely to see Merkel’s CDU/CSU lead a coalition once again. Early concerns over AfD have faded as has SDP’s rise in polls when Schulz became leader. Local media portrayed Schulz TV debating as more like pitching to be Merkel’s COO. Though market impact should be limited, it remains a key event into month-end.”

“EUR may now struggle in the low 1.20s, but economic outperformance should limit dips.”