2 Dec 2014
EUR QE impact limited – BTMU
FXStreet (Barcelona) - FX Strategists at Bank of Tokyo-Mitsubishi UFJ, note that the QE impact in EUR will be limited as it has been largely priced in the market.
Key Quotes
“Considering the more explicit hints of sovereign debt QE by senior ECB officials during November, we now think there is a greater probability of this policy being implemented in Q1 2015, probably March.”
“The plunge in oil prices and the collapse of the Russian rouble leaves the euro-zone more vulnerable to deflation. Indeed, there is now a high chance of a deflation print in January or February if oil prices fail to recover from current levels.”
“Crossing into the sovereign debt QE sphere is certainly a bold step for the ECB but given that the 10-year Bund yield closed at 0.70% in November, we see the QE policy step as something that is largely priced into the market. Our caution in lowering EUR/USD by more also reflects the potential for a shift in rhetoric from the Federal Reserve.”
Key Quotes
“Considering the more explicit hints of sovereign debt QE by senior ECB officials during November, we now think there is a greater probability of this policy being implemented in Q1 2015, probably March.”
“The plunge in oil prices and the collapse of the Russian rouble leaves the euro-zone more vulnerable to deflation. Indeed, there is now a high chance of a deflation print in January or February if oil prices fail to recover from current levels.”
“Crossing into the sovereign debt QE sphere is certainly a bold step for the ECB but given that the 10-year Bund yield closed at 0.70% in November, we see the QE policy step as something that is largely priced into the market. Our caution in lowering EUR/USD by more also reflects the potential for a shift in rhetoric from the Federal Reserve.”