- ECB to end its latest asset purchase programme within 2-5 years -economists.
- A 3-month forecast for EUR/USD is 1.0700 – 12-month forecast is 1.1200.
In a Reuters poll, it is seen that the European Central Bank will cut the deposit rate to -0.60% in Quarter 1 2020 (vs A4 2019 in Sept poll).
Key notes:
- ECB to end its latest asset purchase programme within 2-5 years -economists.
- Euro zone inflation seen at 1.2% in 2019, 2020 (vs 1.3% in 2019, 2020 in sept poll).
- latest ECB stimulus package will not significantly help bring inflation back to target – 95% of 65 economists.
FX implications:
The ECB is the key driver for the euro which is, however, on a northerly trajectory towards the 200-day moving average to the 1.12 handle. “Given the risks to global growth, we expect USD demand to remain well underpinned in the coming months,” analysts at Rabobank explained – “That said we do expect some broad-based slippage in the USD next year based on our assumption of an aggressive step up in the pace of Fed rate cuts. Our 3 month forecast for EUR/USD is 1.07 and our 12 month forecast is 1.12.”
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