16 July, AtoZForex.com, Vilnius – Five major banks have provided their ECB expectations for today’s Press Conference, scheduled eight times annually in order for the ECB to communicate with investors regarding monetary policy.
“We expect an increase in the threshold for ELA to Greek banks from EUR 89bn. We expect the policy meeting to be a net-net EUR bearish event, with President Draghi likely to continue to signal the ECB intends to fully deliver on its QE program and is open to do more to counter any risks to the economic recovery,” predicts BNPP, further adding that the macroeconomic assessment in introductory statement will be similar in many respects to the one in June, still, increased uncertainty should be more prominent. The introductory paragraphs of the introductory statement should also indicate higher sensitivity to the possible impact of financial-market developments on Eurozone monetary conditions.
JP Morgan & Credit Suisse
CS shares a similar view like the JPM saying that they “expect the ECB meeting to provide little new guidance, reiterating the need to keep QE open ended until September 2016 or beyond.” Although JP Morgan would not be surprised if Draghi would introduce some increased measures to shore up the bond markets or lift confidence in light of recent events.
Bank of America Merrill Lynch
BoA notes that the ECB would use any argument to support its dovish message. Since the ECB would prefer to wait, Merrill believes the market needs the central bank to force it in the ‘correct’ direction. Hence, “we would not be surprised to see strong verbal intervention, and reinforcement of forward guidance, throughout the summer…we think the ECB would step up action in September.” BoA expects the ECB’s dovish tone to be negative for the Euro, but it should not contain a sustained effect. //
Barclays foresee President Draghi answering queries about Greece in today’s ECB meeting. Questions like the ECB’s stance on the ELA for Greek banks, and policy responses should financial market/economic conditions deteriorate and contagion intensifies could be presented. “We see the market underpricing the risks of increased volatility and continue to recommend staying short EURUSD spot.”
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