The euro enjoyed reports that ECB president has been cornerned by the German orthodox central bankers and that he can’t push more stimulus.
Is this indeed the case? The team at BNP Paribas thinks that Draghi is set to prevail, explains why, and leaves its low target intact:
Here is their view, courtesy of eFXnews:
The EUR bounced on Tuesday after a Reuters report suggested a number of Governing Council members were uncomfortable with President Draghi’s management style and the push for further policy easing, notes BNP Paribas.
“Past experience suggests that Draghi has been successful in pushing through measures opposed by the ECB hawks, including the OMT, negative rates and asset purchases. Our view is still firmly in favour of a dovish outcome this week,” BNPP argues.
“While the ECB may not yet be in a position to announce a large scale QE, if Draghi clearly commits to reach the balance sheet goal and lift inflation expectations, the EUR will weaken,” BNPP adds.
BNPP maintains a short EUR/USD position from 1.2520, targeting a move down to 1.18.
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