ECB: Technical difficulties possibly pushing tapering into Dec - Westpac

According to Tim Riddell, Research Analyst at Westpac, technical difficulties around tapering are being cited by “official sources” in the media as possibly pushing ECB tapering into Dec. However, market bias is for discussion this month and guidance in Oct, he further adds.

Key Quotes

“Deutsche Bank’s Cryan and German Fin. Min. Schaeuble have called for ECB normalisation, but recent EUR strength caused French Fin. Min Le Maire and EU “officials” to refer to EUR restraining CPI and exports. Whether ECB holds off from referring to tapering this week or not, markets will closely analyse the tone of the press conference for any hawkish references.”

“Surveys continue to be strong, but slips in some non-manufacturing PMIs and wobbles in German factory orders could signal an easing of momentum, therefore industrial production and 2Q labour costs may impact EUR.”